Hurricanes Decrease Insurers' Third Quarter

Hurricanes Decrease Insurers' Third Quarter

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

Three other insurers?American Financial Group in Cincinnati, EMC Insurance Group Inc. in Des Moines, Iowa, and Penn American Group of Hatboro, Pa.?also said the storm would impact their share prices.

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 $38 million.

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

"Loss estimates are evolving, even for earlier storms," he continued. "Some areas have been hit two or even three times. The unprecedented strain on area resources is raising the cost of remediation and repair."

The Hartford said it may revise estimates if greater losses develop. The company noted that reinsurance provides catastrophe coverage, on average, for 88 percent of $695 million of catastrophic property losses incurred from a single event in excess of a $125 million retention.

The company's loss figures do not include estimates from Jeanne or possible assessments from Citizens Property Insurance Corporation, Florida's residual property insurance market.

The Hartford also announced a $49 million increase in environmental 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-quarter earnings per share between 85 and 95 cents. A consensus of analysts' estimates put earnings per share at $1.41 for the quarter prior to the announcement.

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

His company said it expects the after-tax losses, net of reinsurance, from Hurricanes Charley, Frances and Ivan to approximate $23 million

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

EMC Insurance Group said it expects losses from the hurricanes to reduce third-quarter earnings by $4.5 million, or 39 cents a share.

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

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

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

The specialty commercial p-c insurance holding company added that its catastrophic loss reinsurance treaty, which includes reinsurance for 100 percent of $29 million per occurrence in excess of $1 million per occurrence, remains intact and is expected to provide sufficient aggregate capacity for future catastrophic events.

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

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

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

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