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Terrorist attacks evident in Q3 insurer results


November 1, 2001   by Canadian Underwriter


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With insurers coming to grips with their losses from the September 11 terrorist attacks, many are seeing a strong impact on their third quarter results.
Bermuda-based ACE Ltd. was among those reporting a net loss for the quarter as a result of September 11 claims. The company says its net operating loss is US$390.1 million for the quarter ended September 30, 2001, US$1.72 per share, compared with income of US$150.6 million, or US$0.62 per share for the same period last year. The net loss for the quarter is US$442.6 million compared with net income of US$140.8 million in 2000 and the loss per share is US$1.95 for the current quarter compared with earnings per share of US$0.58 for the same quarter last year.
These results were hard hit by a US$558.8 million after-tax loss from September 11. Excluding this figure, the company would have seen net income of US$168.7 million.
For Chubb, the after-tax costs of the September 11 events were US$420 million, or US$2.46 per share, net of reinsurance. The company reports an operating loss of US$240.6 million or US$1.41 per share, compared with operating income of US$184.6 million, or US$1.04 per share. The net loss in the third quarter of 2001 is US$239.0 million, or US$1.40 per share, as opposed to net income of US$207.9 million, or US$1.17 per share for the same period last year.
Excluding the September 11 events, the company had operating income of US$179.4 million, down just slightly from US$184.6 million in third quarter of 2000.
Connecticut-based insurer The Hartford paid out US$440 million in claims related to September 11, resulting in a third-quarter operating loss of US$52 million, or US$0.22 a share. This compares with an operating profit of US$245 million, or US$1.07 a share, in the same period last year.
Including investment losses, The Hartford reported a net loss for the third quarter of US$103 million, or US$0.43 cents a share, compared with a net profit of US$250 million, or US$1.09 a share, last year.
Virginia’s Markel also reported a net loss, in this case US$91 million, or US$10.85 per share, for the quarter, much worse than the company’s third-quarter 2000 loss of US$15.6 million, or US$2.15 per share. The company saw US$75 million in claims from September 11, and also used US$68 million to shore up reserves set aside to pay old claims from discontinued businesses.
Hannover Re, the world’s fifth largest reinsurer, says the terrorist attacks on the U.S. will wipe out its projected yearend profits. The company confirms it will not pay a dividend to shareholders in 2001 and cautioned that it faced losses of US$362 million from the attacks, effectively eliminating an expected profit of about the same amount for the year.
Chairman Wilhelm Zeller says tightening terms and hardening rates will see the company rebound. “We have reason to anticipate that we shall be able to recoup the losses from terrorist attacks in less than three yearsWe have systematically exploited the opportunities offered by the tightening market.”