What’s new: In brief (September 08, 2004)

The most recent insurer to disclose loss estimates from Hurricane Charley is also the hardest hit. State Farm says it will incur a loss of US$1.3 billion, or about 19% of the US$6.8 total industry loss predicted by the Insurance Services Office (ISO). State Farm’s actual loss will be lower however, when reinsurance arrangements and payouts from the Florida Hurricane Catastrophe Fund are factored in.

Revised estimates for Hurricane Frances continue to leave a wide range of potential insured loss totals. RMS and EQECAT have revised their estimates to US$3-$6 billion, while AIR Worldwide puts insured damages between US$5-$10 billion.

A five-year study by Conning Research of U.S. life insurers’ investment picture shows that gross investment income returns between 1999 and 2003 dropped 1.3% from 8.1% to 6.8%. However, insurers did compensate to some degree by lowering their investment expenses. Among the factors contributing to the investment decline were falling interest rates, corporate defaults and rating agency downgrades.