WORLD INSURANCE NEWS

GLOBAL INSURANCE LOSS BURDEN FROM THE TERRORIST ATTACK IN THE USA

Based on the information we received from various sources, the estimation of the loss at this time range from US$35bn to US$58bn.

Lloyd's of London, the world's leading insurance market with a capacity to accept insurance premiums of £11bn, has estimation showing that Lloyd's net exposure arising from the attack at £1.3bn (US$1.9bn). This exposure is equivalent to 12% of the market's capacity.

Lloyd's Chairman Sax Riley commented, "While a figure of this size will have a significant impact on the Lloyd's market, the market's strong capitalisation base will absorb this loss. The size of our asset base, the spread of the losses and the resilient of the reinsurance programmes in place are important in coming to this conclusion".

Munich Re, one of the world top reinsurers, has estimated its possible pre-tax loss burden at Euro 2.1bn and is by far the largest loss in the history of Munich Re. According to Munich Re, besides the twin towers of the World Trade Center, a number of adjacent buildings have been damaged or destroyed and this will have an impact on the level of business interruption claims.

Swiss Re, another reinsurer, has estimated its losses to be approximately CHF2bn. Swiss Re's largest exposure comes from property and business interruption lines.

The type of policies most likely to encounter claims are aviation hull war, aviation liability, property including contents, business interruption including loss of rent, personal accident, workmen's compensation, motor, directors' and officers', public liability, professional liability, travel and cancellation of sporting events. This is however, not an exhaustive list.

Munich Re expects a fundamental reassessment of the risk situation for the renewal of reinsurance treaties that traditionally take place in the last quarter of the year, as the attacks have revealed a previously unimaginable risk potential. This will affect the insurance market worldwide.

27 September 2001