Canadian Underwriter

RSA ups WTC loss estimate by one-third

October 11, 2001   by Canadian Underwriter

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U.K.-based Royal & SunAlliance has increased its estimate of losses from the terrorist attacks on America to 200 million pounds (US$290 million) pretax, up from an earlier estimate of 150 million pounds.
The company reports that while aviation and property losses were relatively easy to tally, the new estimate reflects more complex exposures such as business interruption, workers’ compensation and liability.
In related news, rating agency Fitch says it will not downgrade financial strength ratings for financial guarantors “in the near future” as a result of the September 11 events. “It is difficult to precisely assess the bond insurers’ and reinsurers’ exposure to the World Trade Center disaster because of the indirect impact it has on a variety of sectors in the U.S. and world economy.” However, it notes that mainly local credits such as the New York Port Authority are vulnerable, as well as certain industries hardest hit by the attacks, such as the airline industry.
There are no impending bond insured claims as a result of the attacks, Fitch notes, and it will be several months before the impact on the vulnerable sectors are understood. Among the bond insurers and reinsurers affected by the attacks are Ace Guaranty Re, Axa Re Finance and XL Capital Assurance.
Axa is also making news for its decision to pull out as insurer of soccer’s 2002 World Cup finals. According to World Cup officials, speaking through their website, say the company is withdrawing coverage as a result of the September 11 attacks.
The contract, valued at US$875 million, was to cover various risks, including terrorism, for the international event to be held in the Far East. While World Cup officials say they will negotiate a new contract with another insurer, it remains to be seen if other insurers will be willing to cover major sporting events in the near future as a result of the September 11 attacks and the following U.S. attacks on Afghanistan.

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