The cost of the 11 September terror attacks has pushed the world's second largest reinsurer Swiss Re into the red.

The company said the events of last September had cost it 2.95bn Swiss francs (�1.2bn; $1.75bn).

Allowing for this and other costs meant Swiss Re posted a net loss of 200m Swiss francs, against a net profit of 2.97bn in 2000.

But the company said it expected the insurance market to improve in the coming year.

Better outlook

"11 September was unique," said Swiss Re in a statement.

"The extraordinary nature of the event and the complexity of losses involved has led to uncertainties and revision of loss estimates throughout the insurance industry."

As well as 11 September, Swiss Re also suffered losses from the collapse of Enron and from the damage caused by the tropical storm Allison.

But looking ahead, it said it expected a sharp increase in earnings this year and that this trend should continue.

Premium income growth in its non-life businesses is expected to be more than 11% over the next couple of years.

Analysts had been unsure how much of the cost of September's terror attacks Swiss Re would take on 2001's figures.

"The (profit) numbers are not good, but it had not been that hard to guess that this year would be a bad year," said analyst Javier Lodeiro at Bank Leu.

"But the outlook is super: rising volumes and demand, and premium increases."