S&P Says WTC Verdict Won’t Affect Insurer Ratings

December 15, 2004

Standard & Poor’s Ratings Services announced that it has reviewed the potential impact of the recent federal jury decision in New York that the 2001 terrorist attack on the World Trade Center was–for insurance purposes–two separate events rather than one.

The rating agency duly noted that the ruling “effectively doubles the amount that the developer, Larry A. Silverstein, may collect from the eight insurance companies involved in this case to $2.2 billion.” However, S&P said that, even if appeals of the verdict were unsuccessful, it “believes that the impact on earnings and capitalization of the incremental $1.1 billion in claims would not result in a change to the ratings on any of the insurers.”

S&P listed the insurers affected, applicable ratings and their exposure to each event (before taking into account any reinsurance protection) as follows:

— Allianz Global Risks U.S. Insurance Co. (AA-/Negative/–), a unit of German insurer Allianz AG, $432.9 million.

— Industrial Risk Insurers (owned by Employers Reinsurance Corp.) (‘A+/Negative/–‘), $237.2 million.

— Travelers Indemnity Co. (A+/Stable/–), owned by St. Paul Travelers Cos., $210.6 million.

— Royal Indemnity Co. (BB+/Negative/–), owned by U.K. insurer Royal & Sun Alliance Insurance PLC, $127.8 million.

— Gulf Insurance Co. (A/Stable), owned by St. Paul Travelers Cos., $65 million.

— Zurich American Insurance Co. (A+/Stable/–), $45.7 million.

— TIG Insurance Co. (BB/Stable/–), owned by Fairfax Financial Holdings Ltd., $9.1 million.

— Twin City Fire Insurance Co. (AA-/Negative/–), owned by Hartford Financial Services Group Inc., $2.5 million.

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