Lloyd’s of London able to cope with claims from Japan earthquake

Lloyd’s said its businesses had enough capital to withstand a Japanese quake generating insured losses of up to $64bn, which compares with the $20bn to $30bn hit from the March 11 disaster expected by risk-modellers.

“As part of our market oversight we have a realistic disaster scenario which looks at a $64bn earthquake centred on Tokyo,” Lloyd’s finance chief Luke Savage said.

“We think that this loss which we have seen will come well within that.”

Lloyd’s plans to give an initial estimate of how much the quake will cost it in May, Mr Savage said.

The earthquake, one of the most powerful ever to hit Japan, triggered a tsunami off the country’s north-eastern coast and killed more than 11,000 people, with thousands more missing.

The Japanese government has estimated the total economic impact at $198bn-$309bn, although the insurance industry is expected to pick up only a fraction of this as most losses to households are covered by a state-funded programme.

Outside Japan, global reinsurers are expected to be most exposed, with sector leaders Munich Re and Swiss Re estimating their losses at $2.1bn and $1.2bn re- spectively.

The Japanese quake followed a spate of disasters in 2010 including earthquakes in Chile and New Zealand and floods in Australia, which contrasted with a relative absence of such events in 2009.

Last year’s natural and man-made catastrophes cost insurers about $43bn, a 60 percent increase on the previous year, Swiss Re has estimated.

Lloyd’s, which traces its origins back 323 years to a London coffee house where merchants would meet to insure ships, said last year’s disasters pushed its pretax profit down 43 per cent to £2.2bn.