Zurich, October 8, 2001.- The tragic September 11th terrorist attacks in the United States undoubtedly will result in the largest insured event in history and market loss estimates have constantly increased. Since its statement on September 12, 2001, Zurich Financial Services Group has been continuously reviewing its insurance exposures and claims resulting from these events. The Group currently estimates total pretax losses, net of reinsurance and inclusive of reinstatement premiums, of USD 700 million to USD 900 million. Whilst this is the largest insurance loss ever experienced in the Group's history, it represents less than 2% of the Group's USD 55 billion gross annual premium volume.
The vast majority of the September 11th exposures relate to the Group's US direct non-life and reinsurance businesses, while the Farmers P&C Group and the US life operations are largely unaffected. The range of losses noted principally reflects the uncertainty regarding the ultimate resolution of liability claims. Gross exposure is significantly higher, with protection provided by well-established reinsurers; over 98% of Zurich's expected reinsurance recoverables are with reinsurers currently rated in the "A" category or better by Standard & Poor's.
In addition to the insurance losses, the Group's income is likely to be further affected by lower capital gains and investment income, reduced earnings from those businesses highly correlated with equity markets such as asset management and life insurance, and the now widely expected delay in economic recovery.
Despite all these extraordinary issues, the company's USD capital position remains very strong. Shareholders equity of approximately USD 19 billion is essentially unchanged from the level of 30 June 2001. The current estimated book value per common share is approximately CHF 340.
Prior to these tragic events, the Group was already experiencing much improved commercial insurance market pricing trends. As a consequence of these unprecedented losses, premium rates have further dramatically increased and, combined with the significant efficiency gains that the Group has achieved, are expected to reinforce the positive trends in its underwriting results over the next months and years.
As a leading provider of insurance protection to the business community in the United States, the Group has, in the aftermath of these tragic events, continued serving its customers with very limited interruption. Over 600 of its New York employees had to be evacuated and moved to alternate premises.
Rolf Hüppi, Chairman and CEO said: "Thanks to the extraordinary effort of our employees, our New York operations quickly returned to be fully operational. The Group's financial strength and our dedication to assist and service customers when they need us most has allowed us to build a leading position in the largest insurance markets of the world. The dedication and professionalism of our colleagues, which was demonstrated around the September 11th tragedy, strengthen that resolve."
For further information please contact:
Zurich Financial Services, Media and Information, Iris Roth
8022 Zurich, Switzerland
Phone +41 (0)1 625 21 00, Fax +41 (0)1 625 26 41
http://www.zurich.com
