http://dailynews.yahoo.com/h/nm/20010920/bs/financial_berkshire_outlook_dc_2.html

By Bill Rigby

NEW YORK (Reuters) - Warren Buffett (news - web sites)'s Berkshire Hathaway Inc. (NYSE:BRKA - news) said on Thursday it expects $2.2 billion in pretax losses from World Trade Center insurance claims, the largest exposure so far acknowledged by an insurer, and a forecast that suggests overall insurance losses from the attack will be more than double the amount previously expected.

Berkshire said its loss figure was based on a ``guess'' last week that it would probably pick up 3 percent to 5 percent of overall insurance industry losses.

By that reckoning, Berkshire is expecting $44 billion to $73 billion in pre-tax losses for property-casualty insurers and reinsurers worldwide.

That is well above analysts' most recent estimates of $30 billion or so, and threatens the $50 billion loss level that could seriously harm the insurance industry, according to rating agency Standard & Poor's.

Berkshire joins European reinsurers Munich Re (MUVG.F) and Swiss Re (RUKZn.VX) at the top of the list of insurance companies facing massive claims from the World Trade Center attack Sept. 11.

Earlier on Thursday, Munich Re and Swiss Re both doubled their loss estimates, and are now expecting to pay out $3.2 billion between them.

Other firms with large exposures include Lloyd's of London insurance market LOL.UL, Germany's Allianz (ALVG.DE), General Electric Co.'s (NYSE:GE - news) Employers Re Corp. unit, American International Group Inc. (NYSE:AIG - news) and Bermuda-based insurers XL Capital Ltd. (NYSE:XL - news) and ACE Ltd. (NYSE:ACE - news).

Berkshire, with about $60 billion in shareholders' equity, or assets above liabilities, should be able to absorb the losses, but if Berkshire's estimates are correct, smaller insurers and reinsurers could face insolvency.

Berkshire, with its massive balance sheet, specializes in taking on big-ticket insurance and reinsurance risks through its General Re subsidiary and other units in its Berkshire Hathaway Reinsurance Group.

Berkshire said it would take the $2.2 billion in losses as a charge in its third-quarter, but added that the losses would result in a refund for taxes already paid this year and a reduction in tax due for the remainder of the year.

The attack on the World Trade Center is set to become the most expensive event ever for insurers, surpassing the $20 billion, adjusted for inflation, they paid out after Hurricane Andrew in 1992.

``It will be many years before even a rough range can be established for the losses that the insurance industry will sustain from the terrorist events,'' Berkshire said in a statement last week

-- Anonymous, September 20, 2001