Get Ready For More Hurricanes

By Steve Tuckey

NU Online News Service, Aug. 20, 2:06 p.m. EDT?While the insurance industry is just beginning to get a firm handle on the cost of Hurricane Charley, weather experts said it's likely this will not be the last such event insurers will have to cope with this weather season.[@@]

An industry-sponsored consortium of risk and weather experts predicted today that at least one more hurricane will make landfall during the 2004 hurricane period.

The prediction by the London-based Tropical Storm Risk also calls for an 86 percent probability of an above-normal Atlantic hurricane season with only a one percent chance of a below-normal season.

In addition the group sees a 70 percent chance of above-normal activity for hurricanes that make a U.S. landfall and only a five percent chance of a below-normal season.

TSR lead scientist Mark Saunders noted that in the past four years only three hurricanes have made landfall, leading to lower than usual losses over that period of time.

"This hurricane ?dry spell' can't last, and so the number of hurricanes coming ashore must return to normal," Mr. Saunders said. "And when they do return, they may be more severe than usual."

According to TSR figures, only once in the past 100 years, 1980-83, has the number of hurricanes been lower than in the past four years.

"And the ?dry spell' of the early 1980s was followed by eight land-falling hurricanes in 1985 and 1986," Mr. Saunders said.

TSR is a consortium of experts on insurance, risk management and season climate forecasting led by the Benfield Hazard Research Centre at University College London and is co-sponsored by Benfield, Royal Sun & Alliance and Crawford & Company.

Meanwhile, companies continue to report losses from the storm, which struck Florida and other coast states Aug. 13.

Late yesterday, American International Group estimated that total after-tax net loss will be in the range of $80-to-$100 million.

AIG chairman Maurice Greenberg said that the loss "represents a very small share of AIG's historic quarterly income."

Bermuda-based ACE Limited reported today that total net losses for the entire group will be about $100 million pre-tax, which the company said was in line with previously stated guidance for annual catastrophe-related losses.

Reinsurer Renaissance Holdings Ltd. in Bermuda said Charley losses would hurt third-quarter results by between $100 million and $140 million. The Bermuda-based company said that Florida hurricanes the magnitude of Charley cause disproportionately higher losses to the company, as a percentage of total industry losses.

London-based Alea Group Holdings said that net losses from Charley would not likely exceed $100 million.

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Get Ready For More Hurricanes

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