Canadian Underwriter

Allianz increases Sept. 11 loss estimate

November 15, 2001   by Canadian Underwriter

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In reporting its third quarter 2001 results, German insurer Allianz says its original September 11 loss estimate of US$600 million has risen significantly to US$1.3 billion. The impact of the terrorist attack claims is a US$40.74 million loss for the quarter.
While no third quarter figures are available for 2000 for comparison, the company does note that for the first three quarters of this year, it can report an overall net profit of US$1.16 billion. However, this is well off pace for the yearend 2000 net profit of US$3.04 billion.
Allianz is the latest in a string of large insurers reporting significant third quarter losses as a result of the September 11 attacks.
On a brighter note, Swiss Re has issued US$3.3 billion in new equity and debt in what is being called this biggest capital raising movement since the attacks. A rights issue accounts for about US$2 billion raised, while the remaining US$1 billion was raised in a convertible bond issue.
The capital was originally intended to pay for Swiss Re’s recent acquisition of US-based Lincoln National’s reinsurance operations, but went well beyond that US$2 billion price tag.
The success of the issuance may be a sign of a rebound in investor confidence in the reinsurance market. Despite estimating US$1.25 billion in losses from September 11, and a 25% drop in its share price following the attacks, the company has rebounded and is now trading higher than its pre-September 11 price.
Several analysts have speculated that renewed interest in insurance stocks will result from widespread and intense rate hardening expected following September 11.

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