X-Message-Number: 17619
From: "Mark Plus" <>
Subject: Life insurance sovency crisis ahead?
Date: Wed, 19 Sep 2001 12:01:29 -0700



http://asia.dailynews.yahoo.com/headlines/world/afp/article.html?s=asia/headlines/010919/world/afp/Insurers_lost_at_least_14_bln_US_dollars_from_WTC_attack__S_and_P.html

Wednesday, September 19 2:54 PM SGT
Insurers lost at least 14 bln US dollars from WTC attack: S and P
SINGAPORE, Sept 19 (AFP) -
At least 14 billion dollars in losses have been accumulated by 55 leading 
insurers and reinsurers after the World Trade Center (WTC) disaster, 
Standard and Poor's (S and P) said Wednesday.

The global credit rating agency said this could rise significantly and lead 
to "what is likely to be the largest ever insured loss". Losses would have 
to rise to 50 billion dollars for the insurance system to be threatened, it 
added.

S and P said in a statement it was likely to put insurers and reinsurers on 
creditwatch with negative implications after the WTC's twin towers were 
demolished by terrorists who crashed two airliners into the New York 
landmark on September 11, leaving over 5,000 people dead or missing.

"Net aggregate insured losses of 14 billion dollars have been accumulated 
from 55 leading insurers and reinsurers, based both on confidential 
information provided to Standard and Poor's and publicly available 
information," it said.

"This figure is likely to rise significantly once better estimates become 
available," S and P added.

S and P earlier said once losses exceed 15 billion dollars, it would expect 
to see a "significant impact" on balance sheets of individual insurers.

However "totals would have to exceed 50 billion before Standard and Poor's 
would begin to worry about the insurance system," said Rob Jones, director 
at S and P's Financial Services group in London.

S and P said in the next few days it would further investigate the available 
claims estimates from the leading insurers.

"Many of these companies have substantial financial flexibility and capital 
strength and are expected to have their ratings affirmed," it said.

"Given some initial estimates of loss, however, Standard and Poor's believes 
a significant number of these companies are not as well positioned to absorb 
these exposures and are likely to receive ratings downgrades," it added.

The Lloyd's of London insurance market said Tuesday its potential exposure 
to last week's attacks on US targets would be "manageable," based on early 
estimates.

Lloyd's said in a statement it had "completed a preliminary estimate of its 
potential exposures to attacks in the US last week."

"This analysis leads Lloyd's to believe that, on present information, these 
exposures can be managed within its unique system of financial security -- a 
system underpinned by 27 billion dollars of assets."

In another statement Wednesday, S and P said banks and investment banks 
"appear to have fundamentally weathered" the initial dislocation caused by 
the attacks on the WTC, which housed offices and branches of key financial 
establishments.

"The payments system continued to work even in the immediate aftermath of 
the disaster, and financial markets are now all open for business," it said.

Emergency planning exercises ahead of the feared millennium transition 
period in late 1999 helped banks and brokers transfer operations to 
locations outside the downtown New York area, it said.

"Ratings considerations will focus not on the immediate and temporary impact 
of the World Trade Center disaster, but on its medium- to long-term 
implications for banks," S and P said.

Investment banks could be especially vulnerable to the business interruption 
and potential impact of a further slowdown in already weak capital markets, 
it said.

It warned aggressive share buybacks "will further reduce the tolerance 
threshhold for earnings pressures."

It said that for firms already on a negative outlook before the attack "the 
earlier concerns expressed about the poor operating environment are likely 
to be exacerbated."

These firms included Bear Stearns, Merrill Lynch, Goldman Sachs, Morgan 
Stanley and Charles Schwab Corp.

Other firms that would be "closely examined" included Credit Suisse Group, 
Lehman Brothers, Deutsche Bank AG, UBS AG, and ETRADE Group, it added.




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