NU Online News Service, Sept. 20, 11:35 a.m. – Two major global reinsurers have substantially increased their estimates of claims losses sustained as a result of the Sept. 11 World Trade Center terrorist attacks and related terrorist attacks.
Munich Reassurance Company, Munich, now estimates it will face a pre-tax loss of 2.1 billion euros, or U.S.$1.95 billion. The reinsurer says this total represents 11.5% of its reinsurance premiums in 2000 and constitutes the largest single loss in its history.
Even so, the reinsurer says it still expects to pay a dividend of $1.16, per share.
The company says that, besides the twin towers of the World Trade Center, a number of adjacent buildings have been damaged or destroyed. This will also have an effect on the level of business interruption claims.
Swiss Reinsurance Company, Zurich, also revised its loss estimates.
Swiss Re says the after-tax effect of the event to its finances will be approximately CHF 2 billion, or U.S. $1.25 billion, which corresponds to about two-thirds of its 2000 annual profit.
Swiss Re carries equalization reserves to absorb large loss events, but the above number does not include any withdrawal from these reserves, which at present stand at $1.57 billion.
Swiss Re says no decision has been made as to how and to what extent Swiss Re will use its equalization reserves to cover this loss.
Swiss Re says its largest exposure comes from property-casualty business interruption lines. Swiss Re has been one of the lead reinsurers on the World Trade Center “Twin Tower” property and business interruption cover. Its net reinsurance exposure on the “Twin Tower” policy is approximately $469.5 million. Additional exposure to property losses is expected to come from various sources, including facultative and treaty participations.