Bermuda's insurers and reinsurers will not buckle under the pressure from the huge claims from the World Trade Center and Pentagon disasters, according to the Insurance Information Institute.

But the real cost to the insurance sector could take years to come to light depending on whether the attack constitutes a war risk or not.

The damage has so far been estimated at $15 billion according to Moody's and it is believed it will affect all major reinsurers as liability is usually shared by several companies around the world for different sectors.

But the huge loss of life, the collapse of the World Trade Center and the damage to the Pentagon, together with the destruction of four air-liners is only the start from what could end up being the largest overall claim in the history of the insurance industry.

Analysts at Weiss said that impact on property insurance is likely to be modest, but worker's compensation and business interruption exposure were at the greatest risk as there is no limit to the amount of claims they might incur. Huge claims are expected for airlines, the World Trade Center and adjoining buildings, the life insurance and business interruptions, and the liability is expected to be shared around the world.

"I don't really expect that reinsurers in Bermuda will become insolvent because of this," said Carolyn Gorman, Vice President of the Insurance Information Institute in Washington D.C.

She added: "This will be the most costly man-made disaster the US has ever seen. The cost is definitely in the billions. But the burden will be carried across international borders, and will be borne by all insurers and their reinsurers, both in Bermuda and elsewhere."

She said that after the last huge catastrophe Hurricane Andrew, a few smaller insurance companies went under, but it was a small number and would not likely affect most of the Bermuda industry.

Many Bermuda reinsurers were busy counting the costs of the disaster, but some said that they did not believe that their financials would be directly affected as they were not involved in either catastrophe, property, aviation or business interruption insurance.

Some said they were still working on estimates, others said that the real cost would take years to tell.

XL Capital Senior Vice President Gavin Arton said that the attack would affect the company's third quarter and 2001 results, but the exact figures had not yet been worked out.

He said all staff at XL had been accounted for and many staff were reeling from the human tragedy. But he added that the tragedy would financially impact on many different sectors of their business from insurance to reinsurance, aviation cover and Lloyds.

"This is the largest man-made risk, if you would like to call it and we have a share of it. We do have substantial capital and will be able to meet all of our commitments." He added that the company expected to have more exact figures in the next two days.

Dan Mallow, President and CEO of Stockton Re said that it was very difficult for everyone to separate the personal tragedy from the business as many people on the Island knew many of those who worked in the World Trade Center.

"We are not a retail insurer. As a finite reinsurer we write finite reinsurance. And it is way too soon to know, too early to tell. Is it a war risk, or is it not a war risk?"

He added that the disaster would have to be taken into account in connection with other losses during the year. He said: "We are not particularly invested in property reinsurance nor catastrophe reinsurance side. I do not think that we are going to be that affected. But a lot of our clients and our intermediaries are affected.

"Who knows how much the cost will be? Will we know in a week, in a year, in three years?"

The person answering PXRE's telephones said: "We are still assessing the situation and there is no comment" and refused to put the call through to any of the executive. Jeff Radikie, who would normally deal with such enquiries was in New York, the operator said.

A statement from Max Re extended its sympathies to those whose lives had been impacted by the event, adding that no employees, asset managers or operations were affected by the tragedy.

It added: "Insurance claims are clearly going to aggregate to many billions of dollars and stem from a wide variety of insurance coverages.

"The flow of these claims into the reinsurance market will be complex and take months to accurately quantify. Based on an initial assessment, Max Re does not expect a significant claims impact from these events."

Bob Cooney, President, Chairman and CEO of Max Re, said: "We want to assure our clients, brokers and service providers that Max Re is continuing to conduct business as usual in the face of these devastating events."

The spokeswoman for ACE Ltd said that the company was still assessing the situation and would issue a statement as soon as they had the information available..

Scandinavian Re. Senior Vice President Ed Jordan, said that the company did not expect the disaster to have much impact on their bottom line.

He said: "We don't really anticipate any real impact from the events on Tuesday. We have no aviation or property, we have some business interruption and workers compensation, but in a large book of business, we do not think it will impact us."

Mark Pabst, executive vice president of corporate affairs at Partner Re said that the company was still gathering information.

"We are not in a position to make a correct estimate for the time being, but we believe we are within our capability. We should have a statement by Friday."

American International Group, the number one US insurer with offices in Bermuda, said it expected to incur losses form Tuesday's attack, but did not estimate the likely cost.

Annuity & Life Re Holdings said it expected minimal exposure to losses from the terrorist attack because they do not reinsure any group insurance plans or corporate owned life insurance products.

Calls to Everest Re (Bermuda) Ltd., Renaissance Re, La Salle Re, Overseas Partners Ltd. and Commercial Risk Re were not returned by press time.

But news of the attack resonated in insurance stocks around the world. There were heavy losses in stocks ranging from Munich Re and Allianz AG to Swiss Re and Royal & Sun Alliance Group Plc.

Insurers Chubb Corp, which offers corporate property insurance, said it had significant property exposure at the World Trade Centre, but that reinsurance should limit its pre-tax losses to $100 to $200 million.

Chubb said it is exposed to both property and businesses housed in the towers that collapsed. The company also said that it would pay customers' claims under business interruption, accident and workers' compensation coverages, but it was unable to immediately quantify the potential exposure for these losses.

Munich Re, the world's largest reinsurer, said claims would be "considerable" but would not threaten its financial stability. Swiss Re, the world's second largest reinsurer, said its exposure was "completely inestimable".

In Britain, Lloyd's of London insurance market, whose member syndicates handle many US and aviation insurance policies, is also likely to see large losses.

The American Insurance Association said it could not identify which of its members would be most affected. Sean McManamy, director of public affairs for AIA said: "The coverage on those properties is multi-layered. No one insurer could or would face all that exposure."

On Wednesday's tradings in Japan, casualty insurers were beaten down after worries that payouts would balloon. The top non-life insurer Tokio Marine & Fire Insurance Co Ltd. closed down 100 yen at 1,085 and two other leading companies saw their share prices drop by over five percent.