Terror attacks cost Lloyd's £1.3bn

Lloyd's of London, the world's largest insurance market, says the US terror attacks will cost it £1.3billion, about 12 per cent of its capacity.

Sax Riley, Lloyd's chairman, said: "While a figure of this size will have a significant impact on the Lloyd's market, the market's strong capital base will absorb this loss. The size of our asset base, the spread of the losses and the resilience of the reinsurance programs in place are important in coming to this conclusion."

He added: "The long-term impact of the US attacks on the insurance industry is yet to be fully appreciated. Lloyds is open for business and trading forward. Clearly there will be a contraction of global insurance capacity which will fuel the premium rate rises we've been seeing since the last quarter of 2000."

Lloyd's said the losses were spread among 108 syndicates underwriting insurance at Lloyd's, but gave no breakdown of the claims they face.

The previous costliest disaster in the market's history was the £930million loss from Hurricane Hugo in the US in 1989.

Lloyd's traces its origins to the late 17th century, when an insurance market developed at Edward Lloyd's coffee house in London's financial district.