Renewed fears over insurer Royal & SunAlliance's exposure to the 11 September terrorist attacks on the US weighed on the company's share price yesterday. R&SA closed 4p, or 1.09%, lower at 362p.
WestLB Panmure's Robin Savage raised the prospect of a massive increase in R&SA's World Trade Centre (WTC) liabilities as he assessed the impact of Cox's revelation that its costs could be as high as £125m, four times its original estimate.
In a research note Savage said: "Exposure to claims arising from the events of 11 September 2001 is exceptionally difficult to predict, let alone with accuracy.
"This is the most complex loss of all time. There is only one certainty: in non-life insurance things get worse before they get better."
R&SA's best guess as to the costs of the tragedy is £200m, up from the £150m forecast it gave only days after the attacks.
R&SA reports its full-year results on 28 Feb 2001. It is also expected to provide an update on its WTC and asbestos claims exposures on that date.
A fresh wave of concern about asbestos has swept the insurance sector, since the WTC disaster.
In the aftermath of the collapse of the twin towers it was found that the atmosphere around the New York site contained 555 times the safe level of asbestos.
R&SA, which is one of the leading property and casualty insurers in the US, has already set aside £317m for claims, but is conducting a review to see whether that is enough.
Ratings agency AM Best has estimated that total industry asbestos
claims could be as high as $65bn (£45.6bn), up 63% on previous forecasts.
This higher estimate relates to concerns over so-called "second wave" claims, but doesn't take into account the WTC disaster.
