Lloyd's has revised its predicted losses for all syndicates for the 2000 year of account to £1.49bn from £700m.

The new figure is the first full financial projection to take into account the impact of the 11 September terrorist events.

According to Lloyd's, the World Trade Centre (WTC) attacks will cost an estimated £1.9bn, a rise of 45% on the previous estimate of £1.3bn.

Of these losses, £650m is included in the 2000 figure, because the losses are accounted for in the year the policies were issued. The balance of the WTC loss falls into 2001.

Lloyd's chairman Sax Riley said: "Anyone searching these figures for signs of Lloyd's demise will be disappointed. We've stated clearly that Lloyd's can manage its losses from 11 September. These new projections don't change that position."

He added: "The 40% increase in premium written for this year, and the steep rate rises that have been seen since September, mean our financial performance is turning the corner rapidly."

But Fitch analyst David Wharrier said Lloyd's was increasingly coming up against competition from other markets. Goshawk recently announced plans to set up in Bermuda and Wellington is setting up as a UK regulated company, as Lloyd's private investors cannot afford to fund its capacity goals.

"In 2002, investors will hope to recoup losses from Lloyd's," said Wharrier. "If it doesn't deliver, whether they will want to stay in the market will be up for question."

Despite suffering heavy losses from the WTC, Lloyd's has seen £1.2bn more gross premium written for the first ten months of 2001 than was written last year.

It will announce capacity for 2002 in mid-December.

Standard & Poor's said Lloyd's `A' rating had been put on credit watch with negative implications.