Cost of terror attacks rises 45% for Lloyd's

Lloyd's of London yesterday hiked its estimated losses from the US terrorist attacks by 45 per cent to £1.9bn, raising fears of more demands for cash from members.

Lloyd's had said the total bill would be £1.3bn when it issued its first estimate on 26 September, its largest ever one-off hit in its 300-year history. Like many other insurers, it has increased the level as the scale of damage has become clearer.

As well as increasing the net figure liability figure by 45 per cent, Lloyd's said its gross figure – before reinsurance – was also up by 6 per cent to £5.7bn. The net figure has risen by much more because Lloyd's now believes it will not be able to claim on all of its reinsurance. Lloyd's insisted that the new figure did not mean that its central finances had been weakened. This was despite the fact that Lloyd's also increased estimated losses for the years of 1999 and 2000, which it has still to report.

Sax Riley, chairman of Lloyd's, said: "Anyone searching these figures for signs of Lloyd's demise will be disappointed. We've stated very clearly that Lloyd's can manage its losses. These new projections don't change that position."

But the organisation conceded that future cash calls on members were likely to be higher due to the increased estimate from the hijack attacks.