Wellington Underwriting has raised the estimate of its pre-tax losses from the US terrorist attacks to £50m from £30m.
It said the new figure equated to an after tax loss of 26p per share.
The Lloyd's insurer said it had increased the estimate after additional information had become available.
Wellington has also announced plans to double its underwriting capacity to £1bn for 2002.
It had submitted a revised business plan for syndicate 2020 to Lloyd's for approval and was examining its options to raise additional capital funds to support the increase, it said.
The company added the move reflected "the dramatic positive change in the rating of the business which Wellington writes".
Wellington chief executive Julian Avery said: "While the impact of September 11 is clearly proving worse for the insurance industry than the picture painted by the early estimates issued in the immediate days following the tragedy, the full impact of the dramatic hardening of insurance rates across many classes of business is now becoming apparent.
"Accordingly, Wellington is now seeking to double its underwriting capacity for 2002 to ensure we take full advantage of the opportunities which are now opening up for us."