Canadian Underwriter

Lloyd’s WTC exposure hits $2.8 billion

November 27, 2001   by Canadian Underwriter

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Lloyd’s of London says its net exposure from the September 11 terrorist attacks is now estimated at US$2.8 billion. This is an increase of 45% over an early estimate of US$1.9 billion.
The revised estimate is the result of new property and business interruption claims and increasing reinsurance exposures in light of other insurers increasing their early loss estimates, Lloyd’s states. Gross losses are now pegged at US$8.27 billion, a 6% increase from earlier estimates.
The impact of the new loss projection is being seen on financial projections for 1999 and 2000, the market advises. A loss of US$2.42 billion is now expected for 1991, up 21% from an August estimate of $2 billion. For 2000, losses are expected to hit $2.16, up 112% from earlier projections of $1.02 billion. This year 2000 figure includes US$936 million in September 11 losses, as this was the year in which the policies were issued, Lloyd’s reports.
The market is also seeing significant rate increases into 2001, with a 40% increase in premium income for the first ten months of the year.
Following the announcement of Lloyd’s new loss estimates, rating agency A.M. Best says it is maintaining the market’s A- (excellent) financial strength rating. It says the estimates fall within the expected range. However, the rating is still “under review” until “a greater measure of certainty can be achieved as to the market’s ultimate overall World Trade Center exposure”.
Best is also waiting to see how the losses will impact the market’s Central Fund and the market’s capitalization in the future. Lloyd’s expects to announce its 2002 capacity in mid-December.
“The increase in Lloyd’s loss figure for the World Trade Center disaster is consistent with the adjustments made by a number of Lloyd’s managing agents, and other insurance companies, over the last six weeks. In addition, the figure includes provision for reinsurance failure,” says Lloyd’s chairman Sax Riley.

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