Initial comments highlight the widespread placements of both the hull and machinery coverage, and the Protection and Indemnity (P&I) clubs that are exposed to this potentially large loss following the weekend grounding of the Carnival Corp. cruise ship Costa Concordia off the coast of Italy with more than 4,000 passengers and crew aboard.

Numis Securities estimates an insured loss of US$800m; Joy Ferneyhough of Espirito Santo Investment Bank mentions various sources' estimates ranging from US$500m to US$1bn depending on the ultimate liability claims.

The lines of exposed coverage are hull and liability. The Protection & Indemnity (P&I) coverage of US$3bn is believed to be equally split between The Standard Club and The Steamship Mutual. This will respond to the passenger and third-party liability claims, and removal of wreckage if the Costa Concordia is declared a "Constructive Total Loss". The Clubs are members of the International Group which buys reinsurance above US$60m up to US$2bn. with the London and international reinsurance market and is led in Lloyd's.

Separately, hull and machinery underwriters provide cover for the hull's value which is reported as US$512m. This cover will be widely underwritten around the London market and elsewhere. Retentions will be low (as some global insurers have already reported) and the excess also placed with the London and international reinsurance market.

Hampden comment: Despite the allegations of negligence of the crew, the hull insurers will pay on what is a highly sought after fleet policy. The Lloyd's market is likely to be more affected by the liability claims coming through the International Group reinsurance.