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Lloyd's to absorb terror costs
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September 26, 2001: 6:19 a.m. ET
World's biggest insurance market expects to pay $1.9 billion for U.S. attacks
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LONDON (CNN) - Lloyd's of London expects losses of 1.3 billion pounds ($1.9 billion) from the terrorist attack on the United States.
Insurance companies expect claims for the attacks on the World Trade Center could top more than $30 billion, while actuaries – the accountants to the insurance industry -- estimate costs could be as high as $100 billion.
Lloyd's, the world's biggest insurance market, said on Wednesday claims from the terrorist attacks would be its largest-ever single loss. To date, its biggest loss was £929 millon for Hurricane Hugo, which struck the United States in 1989, but it is still facing ongoing costs for asbestos-related claims.
Now, Lloyd's is facing claims from American Airlines and United Airlines, which had planes hijacked and slammed into the WTC.
"While a figure of this size will have a significant impact on the Lloyd's market, the market's strong capital base will absorb this loss," chairman Sax Riley said. "The size of our asset base, the spread of the losses and the resilience of the reinsurance programmes in place are important in coming to this conclusion."
Its exposure to the attacks was equivalent to 12 percent of the market's 2001 capacity, a measure of its ability to write insurance, Lloyd's said.
Many Lloyd's names, or the private members who provide capital to the market, were bankrupted in the 1980s and 1990s by a series of disasters. Since then, Lloyd's has asked more corporations to share in its profit and losses.
Allianz, Europe's second-biggest insurer, said last week its estimated losses could reach  1 billion ($930 million). The world's two largest reinsurers Munich Re and Swiss Re doubled their estimates for the claims, saying they could pay up to $3.2 billion as they undertook a more detailed assessment of the disaster.
Warren Buffett's Berkshire Hathaway said it expected $2.2 billion in pretax losses from attack claims, the largest exposure acknowledged so far. 
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