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Reinsurers double terrorist claims
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September 20, 2001: 6:59 a.m. ET
Munich Re, Swiss Re double claims estimate to $3.2B for terrorist attacks
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LONDON (CNN) - The world's two largest reinsurers have doubled their estimates for the claims they may face from last week's terrorist attacks in the U.S.
Munich Re and Swiss Re said claims could now be as high as $3.2 billion ( 3 billion) for the pair following a more detailed assessment of the disaster.
Swiss Re said in a statement that since its first press release on the tragedy "other buildings have collapse or are damaged and loss estimates have increased."
It added: "We now believe this horrific attack is likely to develop into one of the largest loss events for the insurance industry."
Munich Re, the world's biggest reinsurer, said the disaster constituted the biggest financial loss the company had ever suffered.
It estimated its possible pre-tax loss burden at 2.1 billion, which represents 11.5 percent of its reinsurance premiums for the 2000 business year.
The company said its claims burden from the attacks, in comparison with its income from premiums, remained marginally less than that following the San Francisco earthquake in 1906.
Munich Re forced to rethink business terms
Munich Re said it would now have to completely rethink the terms and conditions of its primary insurance and reinsurance coverage in light of the attacks, saying the atrocities had "revealed a previously unimaginable risk potential" that would affect not only the U.S. market but clients around the world.
It forecast claims would more than double to $1.95 billion.
Swiss Re said the after tax effect of the terrorist attacks would now be around two billion Swiss francs.
The company said it was one of the lead reinsurers on the World Trade Center "Twin Tower" property and business interruption cover. It put its net exposure at approximately 750 million Swiss francs, but anticipates additional claims will be forthcoming.
Swiss Re will also face claims covering the four hijacked aircraft used in the attacks.
Munich Re (FMUV3) dropped 3.9 percent to 246.80 in midday trading in London, while Swiss Re lost 5.2 percent to reach 136.00 Swiss francs in Zurich. AXA (PCS), the world's biggest insurer, fell 4.5 percent to 19.70 in Paris.
Investment bank Goldman Sachs cut its earnings-per-share forecasts for a number of European companies to reflect the impact of the U.S. disaster.
The company reduced the EPS for Munich Re by 31 percent to 8.54 percent and for Swiss Re from 7.15 to 10.55. 
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