Lloyd's hopes to claw back £290m loss from 9/11

Lloyd's of London is close to recovering £290m in losses it made because of the 11 September attacks three years ago.

Arbitration started last week on the long-standing dispute between the insurance market and a consortium of six re-insurance firms over a claim it made after the terrorist strikes.

Lloyd's runs an emergency pool of assets, called the New Central Fund, that helps insurers which run into trouble because of large, unexpected claims. It re-insured the fund in 1999 with a five-year policy worth up to £500m. Six re-insurers were involved in the deal, led by subsidiaries of Swiss Re and General Electric along with the US insurer St Paul International.

After the disaster in New York, the calls on the fund were huge. It then tried to claim back on the policy, demanding £290m.

The re-insurers argued that because they'd had to pay other insurers at Lloyd's that had made big losses on 11 September, they would, in effect, be paying twice.

Lloyd's threatened to sue, but the two sides ultimately agreed to arbitration. Choosing the arbitration panel has been a long and frustrating task, but it finally came together for the first time last week and is expected to rule in a few weeks' time.

If the insurance consortium loses, it will be another post-11 September blow for Swiss Re, which has already paid $878m (£495m) on a policy to insure the Twin Towers and is resisting another similar claim from the property's developer.