Terror attacks take toll on Swiss Re bottom line

Swiss Re is set to make a loss for the financial year 2001

Swiss Re says it expects to make a "small" loss of SFr200 million for 2001 because of exposure to Enron and the September 11 attacks.

This content was published on February 26, 2002 - 11:16

The company said it had seen record losses last year because of the attacks on the World Trade Center, natural disasters and the collapse of the Enron corporation.

It added that the bottom line had also been hammered by a shortage of new capital entering the market

However, Swiss Re said strong renewals of property, casualty and financial service contracts, with prices up by 11 per cent on average, would boost future growth and profitability.

Management is recommending an unchanged dividend of SFr2.50 per share.

Reserves to absorb losses

The company expects its exposure from September 11 to reach SFr2.95 billion ($1.74 billion). Swiss Re will use about SFr1 billion from its equalisation reserves to absorb part of this loss.

Swiss Re is currently embroiled in a legal conflict in the US with the leaseholder of the World Trade Center, Larry Silverstein. At the centre of the dispute is whether the terrorist attacks constitute one or two different events.

Silverstein, who signed a 99-year lease last July, maintains the towers were destroyed by two separate attacks and that he is therefore entitled to $7.1 billion under the terms of his insurance policy.

Swiss Re, which has the largest liability in the consortium of insurers, has already tried to limit the total losses to $3.55 billion, the maximum agreed for one claim.

A US court decision is pending.

In its statement on Monday, Swiss Re said September 11 was unique. Not only was it the insurance industry's largest ever loss, it also affected several lines of business and led to declines in capital markets which negatively affected investment performance, it said.

Full financial results will be presented on April 10.

Last week, Swiss Re, Zurich Financial Services and Germany's Allianz announced they were in talks to set up a specialist terror insurer to take the risks that other insurers have refused to accept since last September's attacks.

But they said it was not clear if the discussions would bear fruit and repeated their calls for state involvement in providing cover for terror risk.

Large European companied have found it difficult to obtain insurance coverage against the risk of terror attacks on chemical plants, offshore oilrigs and large office buildings since September

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