NU Online News Service, Oct. 15, 10:03 a.m. – The ING Groep N.V., Amsterdam, says it has stopped quoting new workers’ compensation and personal-accident reinsurance coverage while it evaluates the effects of the Sept. 11 terrorist attacks on its ability to protect the reinsurance operations against catastrophic claims.
ING is also increasing its its estimate of the financial effects of the Sept. 11 attacks on its 2001 operating earnings.
Originally, the company had estimated the attacks would cut its 2001 operating earnings only 50 million, but now it has increased the estimate to 100 million.
ING notes that the total cost of attack-related insurance and reinsurance claims will be about 600 million euros, a little more than 1% of its total annual premium revenue.
ING hopes to reduce the effects on operating earnings by drawing on retrocession arrangements that help protect it from catastrophic claims against its reinsurance operations, and by taking a special catastrophe-related charge.
ING can keep the catastrophe-related charge out of its operating results, but the charge will affect its net income and the figures on its balance sheets.
Euros are now trading for about 90 U.S. cents.
ING says the majority of its Sept. 11 exposure comes from ReliaStar, a Minneapolis-based unit it acquired in late 2000.
ReliaStar, a large disability and life insurance company, reinsured carriers that sold workers’ compensation and personal accident insurance to companies with employees on the top floors of the World Trade Center towers, ING says.
Deterioration of global economic conditions is also affecting revenues and risk costs, ING says.
Because of the Sept. 11 and the economic slump, ING is cutting its 2001 profit growth forecast to 5%, from an earlier forecast of at least 17%, the company says.
But ING still expects to report an operating profit, and, at current stock market prices, the company has far more capital than regulations require it to have to support its insurance activities, the company says.