Rig loss in Brazil

Although underwriters managed to escape any significant catastrophe exposure in 2000, all complacency has been shattered by the loss this month of the Petrobras P-36 oil production platform off Brazil. London market sources put the value of the unit, only a few years old, at between US$500mn and $550mn, making it the biggest single offshore energy loss since the Piper Alpha disaster in 1988, which sparked the infamous LMX spiral. The value is way above the biggest cruise liner afloat. The loss has wiped out about 60% of the current global energy premium ($790mn), while leaving Petrobras with a substantial shortfall in Brazil s oil production. Reportedly, Petrobras did not have business interruption insurance.