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New Zealand Quake May Cost Insurers $6 Billion, Peel Hunt Says

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New Zealand Quake May Cost Insurers $6 Billion, Peel Hunt
Buildings, roads and sidewalks in Christchurch were badly damaged or destroyed. Photographer: Martin Hunter/Getty Images

Feb. 22 (Bloomberg) -- Insurers’ losses from New Zealand’s deadliest earthquake in 80 years may top the $6 billion of claims from a previous temblor in September, according to Peel Hunt LLP.

At least 65 people died in the 6.3 magnitude earthquake, which occurred at 12:51 p.m. local time today. Buildings, roads and sidewalks in Christchurch were badly damaged or destroyed. Lloyd’s insurers including Amlin Plc, Catlin Group Ltd. and Beazley Plc dropped in London trading.

“It seems likely that the market loss will be larger than the September quake,” Mark Williamson, a London-based analyst at Peel Hunt, wrote in a note to clients today. Overall losses from last year’s disaster are estimated at between $5.5 billion and $6 billion, he said.

Amlin, Catlin and Beazley, which provide reinsurance to local insurers in the country, were forced to revise up their initial estimates from the September earthquake as the government-backed Earthquake Commission, a disaster relief fund that buys reinsurance from Lloyd’s, raised its loss forecast. The 7.0 magnitude earthquake that struck last September occurred in the early morning and nobody died.

Officials at the three insurers declined to comment.

Prime Minister John Key described the scene as “utter devastation” on Television New Zealand. It’s too early to put “hard and fast numbers” on losses for individual insurers, Peel Hunt’s Williamson said.

Amlin, which expects to pay out $160 million for September’s earthquake, dropped 1.8 percent to 387.9 pence at 10:29 a.m. in London trading. Catlin fell 0.6 percent to 381.4 pence and Beazley declined 1.9 percent to 133 pence.

To contact the reporter on this story: Kevin Crowley in London at kcrowley1@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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