A leading climatologist said in a Bear Stearns analyst conference call yesterday that another elevated hurricane season is expected this year, although not on the order of 2005.
Florida State University Professor Jim Elsner told investors that last year included additional abnormalities such as the storms tracking over a warm current in the Gulf of Mexico.
Mr. Elsner forecast activity levels 50 percent above normal for the upcoming season and said he expects continued elevation for the next five-to-eight years.
Higher Atlantic sea surface temperatures, although not as high as last year, and a negative North Atlantic Oscillation combine to create the potential of storms increasing in frequency and severity.
Bear Stearns analyst David Small said if 2006 shows continued high frequency but lower severity, reinsurers should perform better than insurers, due to generally higher property-catastrophe attachment points. "Therefore, we continue to prefer reinsurers over insurers," Mr. Small said.
In addition, five more years of intense storms could lead both to higher property prices and losses and more share price volatility.
Of the debate of a connection between climate change and hurricanes, Mr. Elsner said evidence strongly suggests that warmer Atlantic sea surface temperatures due to climate change have been driving hurricane activity.
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