XL increase reserves by $200 million for Sept. 11 claims

XL Capital Ltd has announced that it is increasing reserves for losses relating to the September 11 attacks by $200 million and expects to report net investment losses of approximately $120 million for the quarter ended June 30, 2002 largely due to investments in certain telecommunications companies.
President and Chief Executive Officer, Brian O’Hara commented that, “Despite our intensive reserve analysis immediately following September 11, the unprecedented nature of the attacks has resulted in higher losses as information has developed. We believe that increasing our reserves at this time should fully address our exposure to September 11.”
The increase in net loss reserves consists of $135 million of additional reinsurance reserves, resulting from higher business interruption losses as well as exposure to Lloyd’s Central Fund. Also about $65 million of the increase is for in the accident and health book of the XL’s Lloyd’s operations which reflected the Company’s exposure to a higher concentration of victims in the WTC than previously expected.
$92 million in net investment losses were attributed to losses in the XL’s fixed income portfolio for WorldCom, Adelphia Communications and other telco businesses. XL’s investment in Mutual Risk Management was also written-down by $20 million.