The insurance industry has yet to find calm financial waters inthe aftermath of Hurricane Katrina as companies continue to adjustlosses and rating agencies try to understand the future health ofthe individual players.

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Chapel Hill, N.C.-based James River Group Inc. increased itsloss range estimate from $2-to-$2.6 million to $14-to-$16 million,or $1 to $1.18 per diluted share, net of reinsurance and includingreinsurance reinstatements, the company said.

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James River said its initial estimate was based on catastrophemodeling estimates. But specific account information indicateslosses to be greater than the models. The company also said itexpects the losses to be greater than its reinsurance limitstreaty. A portion of the loss in excess of the carrier's catreinsurance limits will be shared with the company's quota sharereinsurer.

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James River did not disclose what those percentages wouldbe.

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There is a full cat reinsurance limit available followingHurricane Katrina as a result of reinstatement of premium payments.It said it has not received reports of material claims fromHurricane Rita.

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Katrina struck Louisiana, Mississippi, and Alabama on Aug. 29,followed by Rita almost a month later, which hit the Texas andLouisiana boarder coast. Rita, slightly weaker than Katrina, stillleft substantial damage in her wake.

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J. Adam Abram, president and chief executive officer of JamesRiver, said the company would suspend underwriting in the propertymarket, but would continue to write in the casualty markets.

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The company wrote its first policy in July 2003. It said itbelieves it has "sufficient financial flexibility to withstandthese losses" and support growth in the casualty business.

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Today, Standard & Poor's added Bermuda-based Aspen InsuranceHoldings Ltd. to its Credit Watch list, with negative implications.Its losses are estimated at between $840 million and $925 million,up from a previous estimate of $590 million.

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One piece of good news was that S&P and Moody's InvestorService changed their ratings on ACE Limited. S&P removed thecarrier from Credit Watch, giving it a stable rating, and Moody'schanged its rating from negative to stable.

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ACE will sell an estimated $1.25 billion in ordinary shares in apublic offering to fund growth opportunities in the global primaryand secondary insurance markets.

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The Bermuda-based company said it also will offer $187.5 millionof ordinary shares, which are subject to a 30-day option.

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The company updated its Hurricane Katrina loss estimates, sayingit expects a net loss of $593 million, including losses of $191million of total primary insurance and $402 million fromreinsurance.

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The carrier said it expects total net losses related toHurricane Rita at $100-to-$150 million.

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Responding to last week's downgrade by S&P and A.M. Best toPXRE, Jeffrey L. Radke, the Bermuda-based reinsurer's president andchief executive officer, said the company was disappointed with thedecisions and that's its 23-year history was a strong indicatorthat it could withstand these losses. It also pointed out that itsplan to raise $475 million in capital from the investor marketwould give it a strong balance sheet for 2006.

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