Update on tragic events in the United States
20 Sep 2001

The tragic events in the United States continue to sadden Swiss Re. Although the human tragedy remains our primary concern, over the past several days we have worked hard reviewing Swiss Re's financial exposure to this event and the impact on the economy as a whole.

Since Swiss Re's first press release, issued early last Wednesday morning, other buildings have collapsed or are damaged and loss estimates have increased. We now believe that this horrific attack is likely to develop into one of the largest loss events for the insurance industry. Therefore, Swiss Re's exposure to the loss will be larger than first estimated.

The after tax effect of the event to Swiss Re will be approximately CHF 2 billion, which corresponds to about two thirds of the year 2000 annual profit. In addition the group carries equalisation reserves to absorb large loss events but the above number does not include any withdrawal from this reserves, which at present stand at CHF 2.5 billion. No decision has been made as to how and to what extent Swiss Re will use its equalisation reserves to cover this loss.

Swiss Re's estimates are based on the assumptions that claims will be paid in full. Given the complex circumstances surrounding the event, the outcome of ongoing substantial debate over liability and other issues will affect the ultimate amount paid by the industry.

Swiss Re's largest exposure comes from property and business interruption lines. Swiss Re is one of the lead reinsurers on the World Trade Center "Twin Tower" property and business interruption cover. Our net reinsurance exposure on the "Twin Tower" policy is approximately CHF 750 million. Additional exposure to property losses is expected to come from various sources, including facultative and treaty participations.

Among the other property/casualty lines, our aviation insurance (hull & liability) estimates are based on the assumption that all liability covers for the four planes involved are total losses. Our exposure to loss under workers' compensation policies is limited.

The group's total life reinsurance exposure is expected to be less than CHF 150 million.

Earnings
The impact of this event, based on the magnitude of the claims, will negatively affect our earnings per share (EPS) in 2001.

Lincoln Re and proposed capital increase
Swiss Re is in the process of obtaining the necessary approvals to acquire Lincoln Re, the reinsurance business of Lincoln National Corp. The purchase contract provides that the claim costs from the 11 September 2001 events remain with the seller.As stated when the acquisition was announced on 30 July 2001, and restated on 7 September 2001, Swiss Re indicated its preference to finance the Lincoln Re acquisition with equity, market conditions permitting. Alternative financing also is available. Swiss Re expects to complete the transaction once regulatory approvals have been received.

Going forward
Swiss Re has committed special resources to help clients in managing these unprecedented claims. At the same time, Swiss Re is consulting with its clients, as partners for the long term, in meeting their ongoing reinsurance cover needs.

Investigation of short selling of insurance stocks
Swiss Re is fully cooperating with all stock exchanges and other authorities investigating short selling of Swiss Re stock, both retrospectively and on an ongoing basis.


Swiss Re information

Swiss Re is one of the world's leading reinsurers with over 70 offices in more than 30 countries. In the 2000 financial year, gross premium volume amounted to CHF 26.1 billion and the net income after tax reached CHF 3 billion. Swiss Re is rated "AAA" by Standard & Poor's, "Aaa" by Moody's and "A++" (superior) by A.M. Best. Swiss Re's operating cash flow for the first six months of this year was over CHF 2.8 billion, in addition Swiss Re has a CHF 101 billion investment portfolio backing its reserves and shareholders equity.

More detailed information about the worst catastrophes over the last thirty years is available from sigma, Swiss Re's independent economic research & consulting unit.

Contact: Swiss Re Media Relations, New York, tel. +1 212 317 5640