Two insurers likely to be hit hardest by a $700m claim for a super yacht at Lurssen shipyard last month have issued profit warnings, indicating the vessel has been declared a constructive total loss.
Neither Lancashire Holdings nor RSA referred to the blaze in their statements. However, insurance sources said the claim is the only major marine loss recorded in the quarter that could have led to the warnings.
Lancashire Holdings, which is exposed to 9% of the claim, said: “The aggregate estimated ultimate net losses for these events are expected to be approximately $30m.”
Losses of $30m
The insurer said the expected losses were net of “anticipated recoveries from the reinsurance market”, suggesting it will settle most of the claim through reinsurers.
RSA, which holds 6% of the cover, said in a third-quarter trading update that its UK and London market business made a £70m ($91m) loss with a combined ratio of 110%, adding that “the marine portfolio was hit the hardest".
While the claim itself does not involve merchant shipping, it has a huge significance for the marine hull insurance market.
While five non-Lloyd’s insurers hold 22% of the total exposure, the remaining 78% is held within the 31 Lloyd’s of London syndicates, with individual exposures ranging between 5.4% and 0.5%.
The claim comes as marine syndicates are struggling to turn a profit in a soft hull market and are under pressure from the Lloyd’s management to improve profitability.
Around six syndicates have reduced their marine lines in a bid to do so and the negative financial impact of the Lurssen losses is expected to encourage more to follow.
The fire is likely to add to pressure for the marine hull market to harden.
Syndicates are likely to be left paying significantly more for their reinsurance on the claim, while the reduced hull capacity will also add to the pressure for rates to rise.
TradeWinds understands the mega yacht newbuilding project was called “Project Sassi” and is referred to as such on the insurance slip.
Floating dock
The three main sections of Sassi’s 146-metre-long hull were put into the covered floating dock for assembly when the fire struck.
As is common in luxury yacht construction, a large part of the outfitting had already been completed prior to the assembly process — a factor that has added to the cost of the loss. The ship had been scheduled for delivery in 2020.
The owner of the newbuilding is a closely guarded secret.
However, there is speculation that the vessel was being built for United Arab Emirates Deputy Prime Minister Sheikh Mansour bin Zayed Al Nahyan, who is also Manchester City Football Club’s owner and benefactor, as an upgrade on his 14-metre $500m, super yacht Topaz.
That vessel was delivered by Lurssen in 2012.
