Tour operator and insurance shares down in the UK
British insurers and holiday firms were today counting the cost of the tsunami that brought death and devastation to Asia.
Wed, 29 Dec, 2004 - 14:12
Shares in Norwich Union owner Aviva, First Choice Holidays and cruise giant Carnival were among those under pressure as the London market opened for the first time since the disaster.
But the aftermath of the quake had little impact on the FTSE 100 Index which took its recent rally into a sixth session, rising above 4819 at one stage and close to a 30-month high.
First Choice said it had 1,200 customers in the areas affected by the tidal waves and one was known to have died in the Maldives.
Shares in the company fell 3% even though it said bookings affected by the disaster were small in comparison to its overall business.
Investors were also concerned about the impact of the tsunami on insurers such as Prudential and Aviva, both of whom saw their stock fall today.
Prudential said it expected the impact to be "minimal" as it has only a small general insurance business in Asia, including India and Thailand.
It is understood the disaster will also have an immaterial impact on the financial performance of Aviva which makes around 8% of its profits from its Asian operations.
Aviva has no general insurance business in Asia after selling the unit earlier this year, but is a partner of Indian bank Lakshmi Vilas to provide life insurance cover.
This means the company is exposed to a small number of policy holders in the Tamil Nadu region. It will also honour travel insurance claims from UK holidaymakers.
Munich Re – the world's biggest reinsurer – has estimated that the cost of the strongest earthquake in 40 years is likely to be below €100m.
Major rival Swiss Re said it was investigating the impact of the tsunami which would mostly concern property damage and business interruption to tourism.
In a statement, Lloyd's of London said the disruption to the communications networks in affected areas was hampering efforts to assess potential losses from the tsunami.
"We expect our exposure to be limited to holiday resorts, personal accident, travel insurance and marine risks," a Lloyd's spokesman said.
Among other UK companies, cruise ship operator Carnival said none of its liners were believed to be in the area at the time of the tsunami and British Airways said it did not fly to any of the affected regions.
Experts have said the impact on most of the economies in the quake region was unlikely to be severe despite the massive death toll.
The disaster was mainly limited to rural areas, with major industrial facilities and transport infrastructure largely affected.
But around 1.2 million foreigners were likely to cancel their trips to Thailand, at a cost of £390m (€549m) in lost revenues, according to the Association of Thai Travel Agents.
courtsbusinessasia quakeplace: ukplace: asiaplace: londonplace: maldivesplace: indiaplace: thailandplace: tamil naduorganisation: norwich unionorganisation: avivaorganisation: first choice holidaysorganisation: carnivalorganisation: first choiceorganisation: prudentialorganisation: lakshmi vilasorganisation: munich reorganisation: swiss reorganisation: british airwaysorganisation: association of thai travel agents