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Zurich issues fourth warning
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December 21, 2001: 4:09 a.m. ET
Europe's third-largest insurer warns of losses, blames terror attacks
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LONDON (CNN) - Zurich Financial Services, Europe's third-largest insurer, issued on Friday its fourth profit warning this year, blaming September's terror attacks.
The Swiss insurer said it now expects a 2001 net loss of $200 million to $400 million. Its share of losses from the attacks on the World Trade Center is estimated to be $760 million, the company said.
Europe's biggest insurer, Axa, warned earlier this week it expects earnings to halve as a result of the attacks. The insurance industry estimates the attack could cost the sector as much as $100 billion in claims.
Zurich Financial also said the stock markets poor performance over the year would result in a $2.3 billion reduction in realized capital gains, including a $900 million write-down on equities and fixed-income securities. In other words, the value of its investment portfolio has fallen sharply.
"Financial markets have been depressed since the beginning of the year and have adversely impacted the group," the company said.
The company's stock plunged 8.5 percent to 379 Swiss francs in early Zurich trading on Friday. Its stock has plunged almost 60 percent this year.
In October, the company said it expected a pretax loss of up to $900 million from the U.S. attacks and scrapped a forecast for net profit of $1.8 billion to $2 billion for 2001. The company expects next year's earnings to be 10 percent to 15 percent above its pre-attack forecasts.
The company's latest warning puts further pressure on Chief Executive Rolf Hueppi, who has faced investor criticism for his management record and for a perceived lack of strategy, Reuters said.
Losses at Zurich Scudder Investments and reinsurer Zurich Re to the tune of $240 million hurt 2001 income, but since the businesses have now been spun off from the group, they are not expected to impact 2002 earnings.
Zurich Scudder was sold to Deutsche Bank in a deal worth $2.5 billion, while Zurich Re was spun off under its new name Converium. 
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