News Middle East08 Dec 2019

Saudi Arabia:World's biggest oil company seeks war & terrorism cover-- Reuters

08 Dec 2019

Saudi Aramco, the world's largest oil company, is looking to buy insurance against war and terror attacks after a damaging drone and missile attack on some of its oil facilities in September, two sources told Reuters.

Aramco has been looking for cover from insurers including those based at Lloyd’s of London and elsewhere in the London market, they added. The firm is seeking cover for facilities in Saudi Arabia’s Eastern Province, its oil heartland, where it suffered the September attacks, one of the sources said.

Available insurance options range from cover against a terror attack or sabotage through to full coverage, which includes war or civil war, along with compensation for the cost of business interruption.

Aramco said in its IPO prospectus that it did not insure against all risks and its cover may not protect it from terrorism or acts of war.

At the 3 November launch of the IPO, which is the world’s biggest and raised $25.6bn with 1.5% of shares offered, Aramco said that it did not expect the 14 September attack to have a material impact on its finances and operations.

An initial loss estimate from the strikes on Aramco’s plants was SAR2bn ($533m), a third source said.

Aramco insures much of its property itself through a captive insurer, Bermuda-based Stellar Insurance. The insurer had indicated its property programme had “no exposure” to the strikes.

Although one of the sources said Aramco also has an “excess of loss” cover with international insurers for any property damage above $200m, this does not cover war or terror attacks, or revenue losses due to business interruption.

Aramco, which said in October it had fully restored oil output after the September attacks on its facilities, did have war cover around five years ago, the source added.

Global reinsurers Hannover Re, Munich Re and Swiss Re, which help insurers cover large risks, declined to comment, while Aon said it did not have “visibility” into whether Aramco was seeking insurance.


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