The direct and indirect impacts of the World Trade Centre disaster may not be understood by insurers for several years, according to ratings agency AM Best. It says the wide-ranging loss estimates (they now go from $US30 billion to $US70 billion) illustrate the discrepancies between gross estimates before reinsurance and net losses reported by specific companies in different industry segments.  

“We reiterate… that the total insured loss is not yet determined and it is still too early to predict the total financial impact of these events. However, it is AM Best’s expectation that losses will exceed $US30 billion.

“AM Best also believes that the insurance industry as a whole will be able to meet its commitments.”

The ratings agency has devised a “stress test” to measure insurers’ present strength. It has resulted in ratings downgrades for some insurers and the placement of others on review. Some significant changes:

Copenhagen Re from A- to B++; Lloyd’s from A to A-; and QBE International Insurance and QBE Reinsurance (Europe) from A to A-.

Companies under review with “developing implications” include Gerling Global (A); Hannover Re (A+); the Liberty Mutual companies (A+); The St Paul companies (A+) and Zurich Financial Services (A+).

Other major organisations have had their ratings affirmed. They include Ace, AIG, American Re, Berkshire Hathaway/General & Cologne Re, Citigroup/Travelers, Chubb, GE/Employers Re, Munich Re, Partner Re, Royal & SunAlliance, Swiss Re and XL Capital. Other re-ratings are under way.

AM Best also expressed confidence in the life insurance sector, putting loss estimates for life insurers and reinsurers at between $US2 billion and $US6 billion.