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The collapse of Baltimore’s Francis Scott Key Bridge is expected to lead to billions of dollars in insurance losses, mounting to the largest ever loss event for the marine market.
The collision of the tanker Dali with the bridge demolished the bridge itself, forcing the closure of the Port of Baltimore, of the the U.S. Eastern Seaboard’s busiest ports, and killing six construction workers on the bridge at the time.
Federal officials told Maryland lawmakers that rebuilding the bridge, a 1.6-mile span, would cost at least $2B, including the cleanup, Bloomberg reported, citing a person familiar with the matter.
Lloyd’s of London Chair Bruce Carnegie-Brown told Reuters on Thursday that he would be “very surprised” if the marine crash didn’t result in a multi-billion dollar loss, noting that “the tragedy has the capacity to become the largest single marine insurance loss ever.”
TD Cowen analysts estimate the insured loss is likely to range from $1.5B and $3B, “though it’s still early, with a lot of unknowns.”
Morningstar DBRS estimated insured losses could total between $2B and $4B. “The collapse of the Francis Scott Key Bridge and the subsequent blockage of the Port of Baltimore will trigger a large number of insurance policies, including marine liability and hull, property, cargo, and business interruption,” said Marcos Alvaraz, Morningstar DBRS managing director of Global Insurance Ratings.
TD Cowen expects the bulk of losses will be borne by marine insurers (also called P&I) providers and global reinsurers. But “company-level impacts should be manageable.” However, the event is likely to lead to higher near-term pricing for marine (re)insurance, the analyst wrote.
Morningstar has a similar view. “Despite the hefty insured losses, we expect they will remain manageable for the insurance industry as they involve a large and diversified pool of well capitalized insurers and reinsurers.”
In addition to the time it will take for policyholders to file and insurers to process claims, the matter is “likely to require a protracted court battle and take a long time to play out,” TD Cowen said.
Lloyd’s, an insurance market with more than 50 member firms, is active in the marine and property insurance markets, which are expected to face large claims from the damage to the bridge and the port’s disruption, Reuters reported.
Separately, Lloyd’s released its full-year 2023 results on Thursday, reporting an underwriting profit of £5.9B, up from £2.6B in 2022. Gross written premiums rose by 12% Y/Y to £52.1B, driven by 4% volume growth, it said. The group also noted that price increases of 7% offset inflation during the year.
TD Cowen analyst Andrew Kligerman keeps a Buy rating on Arch Capital Group (NASDAQ:ACGL), Hartford Financial Services (NYSE:HIG), and Travelers (NYSE:TRV).