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Hannover Re expects 'major loss' from Costa Concordia cruise ship disaster

Hannover Re expects 'major loss' from Costa Concordia cruise ship disaster

HANOVER, Germany—Hannover Reinsurance Co. said Monday that the grounding of the cruise ship Costa Concordia off the coast of Italy this month will result in a “major loss” for the company.

The Hanover, Germany-based reinsurer said it expected €30 million ($38.8 million) of net claims from the loss of the ship's hull.

Liability losses currently are difficult to assess, Hannover Re said in a statement. “The assumption is that a market loss running into triple-digit millions could result,” the company said. “The total loss for Hannover Re—as a leading marine reinsurer—could therefore be in the mid-double-digit euro range.”

Analysts have said the grounding of the Costa Concordia could result in an insured loss of up to $1 billion.

The 114,500-tonne cruise ship, which had 4,200 people aboard when it ran aground, is insured through international markets.

On Monday, London-based investment bank Jefferies International Ltd. said it believed the disaster could result in insured losses of about €650 million ($840.5 million).

In a research note, the bank said that the hull loss likely would be €395 million ($510.8 million).

Jefferies said that Munich Reinsurance Co.'s estimate that it would record a “mid-double-digit euro” loss “seems sensible.”

Hamilton, Bermuda-based Lancashire Holdings Ltd. likely will post a $20 million to $30 million loss from the event, Jefferies said.

London-based RSA Insurance Group P.L.C. is thought to have a 5% line on the hull program, Jefferies added.

In addition to the hull loss, potential liability and environmental losses on the ship's protection and indemnity club coverage could cost €250 million ($323.8 million), Jefferies said, though it described this estimate as “conservative based on historical precedent.”

Thirteen people are known to have died, and 20 are still missing after the ship hit rocks near Isola del Giglio shortly after embarking on a Mediterranean cruise.

The Italian consumer organization Coordinamento delle Associazioni per la Difesa dell'Ambiente e dei Diritti degli Utenti e dei Consumatori, known as Codacons, said it would file a class action claim on behalf of passengers against the ship's owner, Miami-based Carnival Corp. & P.L.C., in Miami this week.

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