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Swiss Re posts WTC related loss
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February 26, 2002: 5:13 a.m. ET
World's No.2 reinsurer estimates cost from attacks of about $1.7 billion
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LONDON (CNN) - Swiss Re, the world's second-largest reinsurer, posted its first loss in a century due to claims from the September 11 terror attacks.
The company estimates after-tax claims from the destruction of the World Trade Center in New York to be 2.95 billion Swiss francs ($1.7 billion). Swiss Re decided to take the lion's share of the loss this year, leaving its reserves intact for future claims.
September's attacks could cost the insurance sector between $75 billion and $100 billion, according to various estimates. Zurich Financial, Munich Re and Lloyds of London are other insurers that expect to report lower earnings as they pick up billion-dollar claims associated with the attacks.
Swiss Re made a net loss of 200 million francs ($118 million) in 2001. Analysts polled by Reuters had expected a net income of 1.5 billion francs but had warned Swiss Re may post a small loss as it took care of its share of losses from the World Trade Center attacks.
The company's stock, which has declined more than 10 percent this year amid declining markets, slipped 1 percent to 146.75 francs in early Zurich trading on Tuesday.
However, Swiss Re expects earnings to increase in 2002 as premium rates rise by about 15 percent. "Given its positive outlook for earnings going forward, Swiss Re expects a sharp increase in earnings for 2002," the company said.
Reinsuers take on and spread the risk of insurance companies for a share of the premium fees paid by the insured. If an insurance company decided to shoulder the entire risk, it could collapse under the pressure of paying for claims. 
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