“Lloyd’s of London raised its estimate of net exposure to the Sept. 11 terrorist attacks in the U.S. to 1.9 billion pounds ($2.7 billion), up 600 million pounds, adding to the already significant burden on the insurance market’s liquidity,” writes Catherine Taylor in today’s Wall Street Journal.

“Lloyd’s, which had been expected to follow rivals in revising upward its initial estimate of exposure to the attacks, said the 46% increase was the result of new property claims and increased exposure on reinsurance, or cover that Lloyd’s has sold to other insurers. The 300-year-old market added it is confident it can still manage the cost of the disaster.”

” ‘Anyone searching these figures for signs of Lloyd’s demise will be disappointed,’ Lloyd’s Chairman Sax Riley said in a statement. ‘We’ve stated very clearly that Lloyd’s can manage its losses from Sept. 11. These new projections don’t change that position.’ “

“Analysts said the increased net loss forecast was in line with their expectations, coming on the heels of upward revisions of exposure to the events by global insurers of as much as 50% over the past two months.”

“They agreed that Lloyd’s could survive the additional losses but said the news would mean a further erosion of the market’s estimated 8 billion pounds capital base. And there were concerns that the numbers could deteriorate further if some weaker reinsurers end up reneging on policies.”

“Estimates for total insured losses from the Sept. 11 strikes range between $30 billion and $80 billion. Tuesday, PricewaterhouseCoopers said the attacks would cost insurers $50 billion to $70 billion. John S. Scheid, chairman of PricewaterhouseCoopers’ Americas Insurance Group, said the attacks are expected to cost life insurers $1.5 billion to $4 billion. Property damage is likely to be between $22 billion and $25 billion, Mr. Scheid said.”

“But Lloyd’s and other insurers are benefiting from a surge in insurance prices since Sept. 11, and some of the companies that operate syndicates at Lloyd’s are tapping their shareholders for additional funds to take advantage of the pricing trend. Lloyd’s provides around 22% of the world’s aviation insurance.”