Insurer storm loss estimates start to pour in

Many insurers and reinsurers and beginning to count the costs of the 2004 Atlantic hurricane and Pacific typhoon season, and preparing investors for the impact on financial results.One of the hardest hit is Bermuda-based Renaissance Re, which says its third quarter earnings will be hit with a US$425 million loss from the four Florida hurricanes Charley, Frances, Ivan and Jeanne which devastated that state from mid-August to late September. Ren Re says it aggressively pursued marketshare in Florida and thus experienced higher losses than its peers.However, RenRe was spared much exposure to the typhoons which have hit Japan and surrounding islands over the past several weeks. So far in 2004, a record seven typhoons have struck the region, with Chaba and Songda causing the worst damage. As recently as Thursday, rescuers continued to search for victims of Typhoon Meari, downgraded to a tropical storm when it hit Japan but nonetheless causing at least 19 deaths. Typhoon Songda is being blamed for at least 32 deaths.The worst of the Atlantic season was felt in Haiti, where the death toll is in excess of 1,500 as a result of Hurricane Ivan. The highest economic losses, however, will certainly be in the U.S., and Florida specifically.Munich Re says its exposure to the U.S. hurricanes is over EUR 450 million (US$560 million), on top of a EUR 40 million (US$50 million) loss in the Pacific as a result of Songda and Chaba. The world’s largest reinsurer has put shareholders on notice that these losses will make it difficult to achieve 2004 profit expectations, which were set at EUR 2 billion (US$2.50 billion).Toronto-based Fairfax Financial Holdings Ltd. says its Odyssey Re, Northbridge and Crum & Forster subsidiaries will likely pay out US$85-$95 million on Hurricane Frances, Ivan and Jeanne losses, on top of the US$35-$45 million in Hurricane Charley losses already disclosed.XL Capital is putting losses from the first three hurricanes at US$345 million and says these losses will materially affect third quarter and full year results. No estimates were yet available for losses from Hurricane Jeanne, but the company did confirm it had limited exposure to the Pacific typhoons.And Swiss Re had already disclosed US$480 million in pretax claims from the first three Atlantic hurricances, as well as US$110 million in losses related to Typhoon Songda. The reinsurer says it may have to dip into reserves to address the claims. And, “Swiss Re expects that the frequency and severity of this year’s storm season will have a positive effect on renewing reinsurance rates,” notes a company statement.