Canadian Underwriter

Lloyd’s losses scrutinized by U.S. regulator

October 15, 2001   by Canadian Underwriter

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U.S. regulators will be looking at the finances of insurance market Lloyd’s of London in the wake of the terrorist attacks on the World Trade Center and Pentagon on September 11. Following the incidents, Lloyd’s announced that its exposures would be US$1.9 billion for the market as a whole. The National Association of Insurance Commissioners (NAIC) says it will investigate the market’s ability to meet these claims.
While Lloyd’s offered no comment on the investigation, chairman Sax Riley had earlier said the market would be able to meet its responsibilities. This had been determined through disaster scenario testing, he said.
Lloyd’s members insure the World Trade Center, as well as both airlines involved in the terrorist attacks.
Meanwhile, Amsterdam-based ING says its exposures in the terrorist attacks are considerably higher than previously thought. The early estimate of EUR 50 million pretax has been upped to EUR 600 million after tax.
The increased figure is the result of additional claims from U.S. subsidiary ReliaStar, the company reports. “These claims relate to losses incurred by companies that were based on the upper floors of the World Trade Center, through reinsurance of carriers that write workers’ compensation contracts and personal-accident insurance.”
The new loss figure equals just over 1% of the company’s annual premium of EUR 50 billion. The company says that most of the losses will be charged against catastrophe provisions and retrocession contracts, so that the impact on ING’s 2001 balance sheet is EUR 150 million pretax. This will also have an effect on the company’s expected 17% rise in profits per share for the year, as will the global impact on the company’s other banking and financial products. ING now predicts a 5% rise in profits for 2001.
The company also notes that “pending further information on the availability of future catastrophe cover and pricing, ING has stopped quoting workers’ compensation and personal-accident reinsurance coverage”.

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