A number of insurers have revised their Hurricane Ike loss estimates upward and more may be expected, according to an executive with Guy Carpenter reinsurance brokerage.

According to figures from Swiss Re, the storm in September of 2008 caused an insured loss of $20 billion and was that year's costliest

David Flandro, Guy Carpenter senior vice president, writing in GCCapitalideas.com, noted a handful of companies' substantial upward loss estimate revisions of marine losses, including off-shore energy installations.

He said the changes reflect the complexity and difficulty of modeling exposure, as well as the subsequent investigation and assessment of claims.

“Guy Carpenter expects that other companies may report increased loss estimates for Hurricane Ike–whether in preemptive statements or in fourth-quarter and full-year 2008 results,” wrote Mr. Flandro.

He noted that Partner Re had reported a 60 percent before-tax increase to $305 million and mentioned that new information from clients, reflecting larger losses than initial notifications, is the primary cause for changes.

According to Guy Carpenter, the increases were mostly primarily concentrated in the marine line of the global (non-U.S.) specialty subsegment and per risk treaties in the U.S. subsegment, with a more modest increase in the catastrophe subsegment.

The article mentioned that IPC Holdings on Jan. 7 reported a 53 percent increase from $88 million to $135 million. In that case, the company said that new client information or estimates were responsible, with losses concentrated on the assumed retrocession book (including direct and facultative) and the onshore energy book.

Mr. Flandro also cited the report two days later by Advent Capital, the specialist Lloyd's insurer, of a 180 percent increase in its loss estimate from ?15 million ($28 million) to ?42 million ($61 million).

That increase, said Guy Carpenter, came from the Advent Lloyd's syndicate 780 offshore energy account, with larger than expected losses reported, especially from sub-sea physical damage on offshore energy installations where damage was more severe than expected.

Advent reported that its reinsurance protection against such losses was exhausted and that further increases in losses would be taken net.

On Wednesday Platinum Underwriters Holdings Ltd. increased estimates 57 percent from $60 million to approximately $165 million, net of reinstatement premiums and tax benefit.

The updated Platinum estimate reflects larger losses than initially estimated, industry loss estimates, portfolio modeling and historical development patterns. The increase in loss estimates results primarily from offshore marine, risk excess of loss and property catastrophe business, said Guy Carpenter.

Special Reports /

Hurricane Ike Losses Keep Exceeding Estimates

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