Lloyd's of London estimated a loss of £1.4 billion from Hurricane Katrina yesterday - a figure it said its insurance market was well able to absorb.
The organisation said Katrina was set to be its second biggest single-event loss, after claims related to the September 2001 attacks on the World Trade Center, estimated at up to $3.5 billion.
Lloyd's said its provisional loss estimate was comparable with the impact of the four US hurricanes in 2004, which resulted in a net loss to the market of £1.3 billion.
Hurricane Katrina, which struck the Gulf coast on August 28, caused massive damage and widespread flooding and displaced one million people.
However, Lloyd's said the position of the market was strong and that its financial planning took into account scenarios such as a Gulf of Mexico windstorm. "Based on current information, Lloyd's believes any impact on the Central Fund would be immaterial, and there is nothing to suggest that any syndicate would not be able to trade forwards as a direct result of Hurricane Katrina," it said in a statement.
Among recent changes to modernise the market, Lloyd's has introduced a new franchise structure and phased out the number of Names who backed the market with an unlimited liability.
The 62 syndicates who underwrite insurance at Lloyd's have supplied details of the impact of Hurricane Katrina on their businesses in the last few days.
Among European reinsurers, Swiss Re recently doubled its estimate of its potential losses from Hurricane Katrina by warning of claims expected in the region of £650 million.