U.K.’s Cox Increases WTC Loss Estimates

January 24, 2002

Cox Insurance, a leading Lloyd’s underwriter and retail insurer, announced that additional claims from the WTC disaster have raised its loss estimates from £67 million ($96.5 million) to between £85 million and £125 million ($122.5 million and ($180 million).

The announcement highlights the difficulty many insurers are facing in estimating the exact amount of the losses they may eventually pay as a result of the Sept. 11 attacks. More than four months after the devastation occurred, there’s still a wide gulf in estimates of what the eventual cost will be. The highest figure is around $70 billion, while lower ones go down to $29 billion.

The exact amount of Cox’ losses , which are net of reinsurance recoveries,may remain unknown for many more months, necessitating the setting aside of additional reserves, which decrease capacity, and make it more difficult to increase income from rising premiums. The insurer indicated that it was considering raising additional equity capital, as others have done, to address the problem.

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