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Insurers shaken but solvent-so far.

Article Excerpt
NEW YORK-The financial shock of the Sept. 11 terrorist attacks will leave most insurers and reinsurers damaged but still solvent.

The extent of the damage, though, will depend on the ultimate industrywide loss: Estimates in the last week have ranged from $30 billion to $72 billion. And the higher the number goes, the greater the risk of insurer and reinsurer failures.

``Assuming that this is not a $50 billion event, this is something that the industry can manage,'' said Mark Puccia, managing director with Standard & Poor's Corp. in New York. ``It could be double to triple what (Hurricane) Andrew was, and the industry can manage it with only modest impact.

``If this becomes a $50 billion event, it's a whole new ballgame in terms of insurer solvency,'' Mr. Puccia said.

Smaller, weakly capitalized insurers and reinsurers are particularly vulnerable if losses soar, and some Lloyd's of London syndicates will not survive, analysts predict.

Even the majority of insurers that will weather the catastrophe probably did not anticipate such a massive loss hitting so many different lines of coverage-from aviation to property to workers compensation-and may find themselves under-reinsured for this ``clash'' exposure, some analysts say.

One of the problems that will grow as industrywide losses climb is unrecoverable reinsurance, though it will not prove crippling for most companies, analysts say. At the very least, though, insurers face delays on reinsurance recoveries as disputes arise over coverage terms, including fights over how many...

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