Hurricanes Decrease Insurers' Third Quarter

NU Online News Service, Sept. 30, 4:14 p.m.EDT?The Hartford said third-quarter earnings would fall 46cents a share below analysts' estimates following multiplehurricane losses in Florida amounting to $198 million.[@@]

Three other insurers?American Financial Group in Cincinnati, EMCInsurance Group Inc. in Des Moines, Iowa, and Penn American Groupof Hatboro, Pa.?also said the storm would impact their shareprices.

The Hartford Financial Services Group Inc., in Hartford, Conn.,said it projects losses from Hurricane Charley at $86 million;Hurricane Frances at $74 million; and Hurricane Ivan at $38million.

"Given these events, our property-casualty bottom line for thequarter will be significantly lower than expected," said RamaniAyer, chairman and chief executive officer, in a statement.

"Loss estimates are evolving, even for earlier storms," hecontinued. "Some areas have been hit two or even three times. Theunprecedented strain on area resources is raising the cost ofremediation and repair."

The Hartford said it may revise estimates if greater lossesdevelop. The company noted that reinsurance provides catastrophecoverage, on average, for 88 percent of $695 million ofcatastrophic property losses incurred from a single event in excessof a $125 million retention.

The company's loss figures do not include estimates from Jeanneor possible assessments from Citizens Property InsuranceCorporation, Florida's residual property insurance market.

The Hartford also announced a $49 million increase inenvironmental reserves after it completed a review that found"changes in the particular circumstances of each account."

All told, the after-tax charges would result in third-quarterearnings per share between 85 and 95 cents. A consensus ofanalysts' estimates put earnings per share at $1.41 for the quarterprior to the announcement.

American Financial Group Co-President Carl Lindner III said heexpects 2004 annual earnings to dip to $2.75 per share from thecurrent estimate of $2.90 as a result of the storms.

His company said it expects the after-tax losses, net ofreinsurance, from Hurricanes Charley, Frances and Ivan toapproximate $23 million

American Financial Group said no estimates have been talliedfrom Hurricane Jeanne, which struck Florida on Sept. 25.

EMC Insurance Group said it expects losses from the hurricanesto reduce third-quarter earnings by $4.5 million, or 39 cents ashare.

Losses from Hurricanes Charley, Frances and Ivan are estimatedby EMC at $6.9 million. The firm's reinsurance segment said itanticipates losses from the three hurricanes will be capped at $1.5million under its quota share agreement with Employers MutualCasualty Company.

EMC said the majority of its losses in the property and casualtyinsurance segment came from Hurricane Ivan damage, which inflicteda $2.4 million loss. The company said that Frances generated a $1.5million loss for its reinsurance segment. The company said it isincreasing reserves by $588,000 in the third quarter?reducingearnings by an additional 3 cents a share.

Penn-America Group Inc., of Hatboro, Pa., said it expectsafter-tax losses from Hurricanes Charley, Frances, Ivan and Jeanne,including additional reinsurance premiums, will amount to $3.4million, or 23 cents a share.

The specialty commercial p-c insurance holding company addedthat its catastrophic loss reinsurance treaty, which includesreinsurance for 100 percent of $29 million per occurrence in excessof $1 million per occurrence, remains intact and is expected toprovide sufficient aggregate capacity for future catastrophicevents.

Cincinnati Financial Corp. announced today an estimate of $13million for pretax catastrophe losses resulting from HurricaneFrances and a preliminary estimate of $36 million, net ofreinsurance, for pretax catastrophe losses resulting from Ivan.There are no loss estimates from Jeanne.

Bermuda-based XL-Capital said it expects to receive net claimsfrom Hurricanes Frances and Ivan of approximately $70 million and$150 million, respectively.

Most of the claims from Frances will come from the company'sreinsurance segment while those from Hurricane Ivan will come fromits primary and secondary segments equally.

Also, Bermuda-based Montpelier Re Holdings said today that thecombined net negative impact of losses from the four hurricanes andtwo Pacific typhoons to be in the range of $185-to-$235million.