State Farm Charley Losses at $1.3 B
By Steve Tuckey
NU Online News Service, Sept. 7, 11:09 a.m. EDT?State Farm said losses from Hurricane Charley will amount to $1.3 billion, the highest dollar loss of insurers that have reported losses from that storm to date.[@@]
A company news release late last week stated that a portion of State Farm's Florida claims for the Aug. 13 hurricane will be covered through reinsurance agreements, including the Florida Insurance Catastrophe Fund.
In a research note this morning, Prudential analyst Jay Gelb contrasted the hard hit State Farm took to the relatively mild losses of $425 million the state's number-two insurer Allstate took.
"We attribute this difference to Allstate's continued focus on managing catastrophe exposures in hurricane-exposed areas, increasing deductibles and disciplined underwriting standards," Mr. Gelb wrote.
The analyst noted that State Farm will incur about 19 percent of the $6.8 billion total industry insured losses from Hurricane Charley?the equivalent to 81 percent of their 24 percent homeowner's market share in Florida.
"On the other hand, Allstate's $425 million of losses from Charley equates to six percent of the industry's loss," Mr. Gelb wrote. "Notably, this is only 54 percent of Allstate's Florida homeowner's market share."
Mr. Gelb added "our hope is that this significant loss for State Farm will keep the company focused on disciplined growth that would keep a favorable environment intact for personal lines insurers."
A State Farm spokesman this morning said the company has not made any dollar loss estimates for Frances, as of yet.
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