Oil spill will cost Partner Re $70m

Insurance claims arising from the explosion of the Deepwater Horizon drilling platform in the Gulf of Mexico could top $1bn (£661bn), according to reinsurer Partner Re.

Following the explosion on 20 April, the platform sank 50 miles south-east of Venice, Louisiana. An emergency operation to stem the huge oil spill is underway, while US politicians look at ways to prevent such an environmental disaster ever happening again.

A host of litigation is expected to follow the oil spill.

Rig operator BP has said it is not to blame for the accident, blaming Transocean, the owner of the rig. Both companies are expecting lawsuits.

Partner Re said in a statement: “The ultimate insured loss for this event is unclear, given the multiple parties involved and the ongoing situation regarding control of the oil spill. The company estimates that insured losses from the explosion have the potential to exceed $1bn. Given current information, the company expects its second-quarter 2010 results will include claims relating to the explosion in the range of $60m-$70m. These losses are expected to be contained primarily within the Global Specialty and ParisRe sub-segments.”

Transocean’s insurers are believed to include a number of Lloyd’s and Bermuda carriers, including QBE, ACE, Axis and Lancashire. BP has its own captive insurer.