COST OF CLIMATE CHANGE
Swiss Re Estimates Hurricane Ida Could Cost Insurers $30 Billion
On an industry level, Swiss Re now estimates that total insured market losses from Hurricane Ida to be in the range of $28–30 billion, excluding federal flood insurance losses.
Hurricane Ida, the second-most intense hurricane on record to hit the state of Louisiana, also caused extensive wind and flood damage across the Eastern and Mid-Atlantic parts of the U.S. After making landfall on August 29, 2021, the category 4 hurricane caused wide-ranging power outages and severe infrastructure damages particularly in Louisiana, before triggering exceptional flash flooding and storm surges in the Northeastern regions of the country.
Swiss Re estimated its own preliminary claims burden from Hurricane Ida at approximately $750 million.
The estimates may need to be adjusted as the claims notification and assessment process continues.
Photo: Lyndell Scott walks past the debris of his gutted home in the aftermath of Hurricane Ida in LaPlace, La., Friday, Sept. 10, 2021. With almost all the power back on in New Orleans nearly two weeks after Hurricane Ida struck, the city is showing signs of making a comeback from the Category 4 storm (AP Photo/Gerald Herbert)
The oil giant said Hurricane Ida will knock its overall underlying earnings and cash flow from operations in the third quarter.
By Holly Williams
Royal Dutch Shell has warned over a hit of around 400 million US dollars (£294 million) from Hurricane Ida in the US Gulf of Mexico.
The oil giant said the impact of the hurricane will knock its overall underlying earnings and cash flow from operations in the third quarter.
And it cautioned over production losses of around 90,000 barrels of oil equivalent a day in its key upstream division as a result of the storm.
Hurricane Ida slammed into a critical port at the end of August that serves as the primary support hub for the Gulf of Mexico’s deepwater offshore oil and gas industry in the US.
This has combined with curtailed production to compound the recent spike in oil prices, with Brent crude recently surging to three-year highs above 80 US dollars a barrel.
Shell also flagged rising global energy prices, which will see margins fluctuate significantly across its integrated gas cashflow from operations in the third quarter, but is not set to take its toll on earnings in the upstream division.
The update, which comes ahead of third-quarter results on October 28, set the scene for a year dominated by rising oil prices.
Shell said that over the full year, every 10 US dollar increase in the cost of Brent crude adds around three billion US dollars (£2.2 billion) to upstream earnings and 1.1 billion US dollars (£809 million) to integrated gas earnings.
Oil prices have soared amid rocketing demand as the global economy has rebounded from the early days of the pandemic, while oil cartel Opec has increased production slowly after deep cuts made last year as the crisis struck.
Shell’s update showed integrated gas production for the third quarter of between 890,000 and 950,000 barrels of equivalent oil per day, with the upstream division set to produce between 2,025 and 2,100 a day excluding the Hurricane Ida impact.
In July, Shell’s revealed its adjusted earnings raced more than eight times higher in the second quarter, to reached a little over 5.5 billion (£4 billion) thanks to steep rises in the cost of crude.
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