Everest Re Group Ltd. announced yesterday its loss estimates from last year’s hurricanes are being increased, and one analyst predicted other carriers will revise storm losses upward as well.
The Bermuda-based reinsurer said it raised loss estimates from the 2005 storms by $200 million to $1.2 billion.
In reaction, Bear Stearns senior property-casualty analyst David Small said, “We believe Everest Re will not be the last to disclose adverse development from the storms.”
“Given the size and complexity of events, we suspect the fourth-quarter earnings season will see loss increases from many other players,” he said.
Personal lines will show fewer adjustments than commercial lines given the more complex loss adjustment process of the latter, he said.
Mr. Small said it was significant that the increased losses were spread across the three hurricanes, with larger marine and energy losses from Rita, which struck the Houston area, than previously expected.
“In our view, due to the hurricanes draining loss adjustment resources, along with the unique nature of the storms, insurers and reinsurers will likely continue to face more unexpected difficulties than in typical seasons,” he wrote.