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WTC costs hits insurers
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September 14, 2001: 5:03 p.m. ET
GE and Metlife cut third-quarter earnings expectations; others dismiss impact
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NEW YORK (CNNfn) - General Electric announced Friday that the World Trade Center's destruction will cause it to cut third-quarter profit forecasts, while MetLife Inc. said the attack will nearly wipe out its earnings for the period.
Fairfield, Conn.-based GE (GE: Research, Estimates), through the Employers Reinsurance Corp. division of its GE Capital unit, expects to reduce third-quarter net income by 4 cents and now expects to report earnings of 33 cents a share. GE had expected to meet First Call third-quarter estimates of 37 cents a share.
GE's losses due to the WTC attack are expected to be $600 million or about $400 million after taxes.
Employers Re is one of the many companies providing reinsurance coverage of the WTC and the four aircraft used in Tuesday's attack. Employers Re viability is not threatened, GE said.
Separately, MetLife Inc. sees losses from the WTC destruction of about $250 million to $300 million. The attack will cut third-quarter income by 35 cents-to-40 cents a share, the insurer said in a statement.
Earnings tracker First Call had expected the company to log a profit of 57 cents a share for third quarter.
Impact from the WTC attack will mainly affect MetLife's third quarter, a spokesman said.
"We note that our core businesses continue to perform in line with expectations for the quarter and we continue to have substantial liquidity to maintain our share repurchase program," MetLife chairman Robert Benmosche said in a statement.
New York-based MetLife (MET: unchanged at $28.80, Research, Estimates) did not provide further guidance.
Insurance claims from the World Trade Center have been estimated to reach as much as $30 billion. The attack could even surpass the assessed damage levied by Hurricane Andrew in 1992. Insurers paid more $19 billion for that natural catastrophe.
Insurers are expected to take the largest negative hit among U.S. sectors from the destruction of New York's World Trade Center complex, with U.S. and international providers seen sharing the costs.
No impact
John Hancock Financial Services Inc. said Friday that WTC destruction will not have a material impact on earnings per share (EPS) for rest of the year and the insurer will not change guidance.
Boston-based John Hancock (JHF: Research, Estimates) expects 2001 EPS growth of 10 percent-to-12 percent, assuming that the stock market grows 2 percent-to-3 percent for the second half of 2001.
First Call sees John Hancock reporting third-quarter earnings of 67 cents and $2.61 for 2001.
Allstate Corp. also emphasized that the WTC attack will not be a major financial event for it.
"The news reports about damages 'in the billions of dollars' for the insurance industry refer mainly to the heavy commercial losses anticipated for insurers of the physical structures of and near the World Trade Center, the businesses within them, and the airplanes involved," Allstate CEO Edward Liddy said.
The insurer does not write large-risk commercial insurance but focuses on small commercial policies, primarily for commercial autos and fleets, Northbrook, Ill.-based Allstate (ALL: Research, Estimates) said in a statement. 
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