This is just an early warning incase you get calls from business unit managers complaining about insurance premiums going up in the budget process. The intial estimates had been agreed last month and now we have to reopen the process to account for the WTC attack impact on the insurance markets. If you have any questions or if internal issues come to your attention, please contact me or Jim Bouillion. Per

 -----Original Message-----
From: 	Clayton, Paul  
Sent:	Thursday, September 20, 2001 8:55 AM
To:	Copeland, Erin; Coates, Kim; Smith, Jeff E.; Cockrell, Rainier; Ekin, Nicky; Roper, Kerry; Hayslett, Rod; Geaccone, Tracy; Keiser, John; Tran, Agatha; Killen, Faith; Lee, Dana; Massey, Rachel; Barrett, Carolyn; Sughrue, Jill; Akhave, Billie; Yamada, Terry; Parrish, Paul E.
Cc:	Bouillion, James L.; Derr, Dawn; Sekse, Per
Subject:	2002 Insurance Budget - RC 100226
Importance:	High

Last week's catastrophic event in New York and Washington D.C. has produced losses precipitating a further "hardening" of the worldwide insurance market resulting in higher rates, larger deductibles and retentions and more restrictive terms and conditions. The greatest impact has been to the property insurers with loss estimates in the billions. Liability insurers have seen a lesser impact in projected losses but rates are also expected to rise.

Our initial budget assumptions could not foresee this event. After consultation with our insurance market resources, we have deemed it necessary to increase our premium projections by an additional $9million for Property and $3million for Excess Liability. Enron's Worker's Compensation, Auto Liability, and General Liability are insulated from market fluctuations due to the use of our captive to fund these exposures.

Our budget only contemplates actual premiums. In the event the property deductible increases beyond the capabilities of the business units, we may be required to arrange a funding or other mechanism to manage the deductible. We are prepared to discuss this with you on an individual basis.

You will be receiving a revised budget from Corporate Financial Planning incorporating these increases. 

Please review and give me a call at x37904 should you wish to discuss further.

Regards,