Despite this shortfall in its first year of operation, Pool Re sees no need yet to call on the Government to make good the deficit. At the inception of Pool Re in December 1992, the Government agreed to act as 'reinsurer of last resort' to ensure businesses would still be able to obtain insurance cover against terrorist attack. Commercial reinsurers abandoned the market after the first City bombing, of St Mary Axe, in April 1992.
Keith Loney, Pool Re's company secretary, says the company will call on the Government only if it runs out of money. Since most of the pounds 360m claims on Pool Re have still to be settled, this threat is some way off.
According to the company's first annual report yesterday, the pounds 47.6m of claims paid last year were comfortably covered by premiums of pounds 222m.
Pool Re will be able to use premiums collected in this and future years, together with investment income, to pay outstanding claims. Another large and costly terrorist attack would make a call on the Government much more likely.
Mr Loney says Pool Re does not believe it is necessary to raise premium rates again. After the Bishopsgate attack, the Government insisted on sharp increases. Mr Loney says the rating review is continuing.
The total insured cost of the Bishopsgate bomb is estimated at about pounds 700m. However, nearly half of this falls on other insurers.
Some did not have reinsurance cover while others were still protected by the tail-end of reinsurance contracts arranged before the St Mary Axe bomb.
Pool Re is a mutual owned by its 217 members, including 88 Lloyd's syndicates. Of 129 company members, 29 are incorporated outside the UK.
The pounds 222m premium income is much less than the pounds 350m-a-year envisaged for Pool Re. Although businesses have mostly taken out terrorism insurance in London and other metropolitan areas, the take- up in provincial areas has been more modest.