Safeco revises its storm costs upwards by $44m

LOSSES from hurricanes Charley and Frances were larger and more severe than first anticipated, says insurer Safeco.



Safeco revised its loss estimate for the two storms to $117m, a $44m increase compared with its previously reported estimate of $73m. The insurer said its aggregate pre-tax catastrophe losses for the third quarter are estimated at $195m, with $183m of this attributable to the hurricanes. The losses will reduce third-quarter net income by $127m after tax. "This hurricane season has taken a tremendous toll in Florida," said Mike McGavick, Safeco chairman and chief executive. "While we were taken aback by the number of large losses from Charley, we now have inspected every severe and potentially large loss from the hurricanes and 67% of all claims.



"Four hurricanes hitting one state in a span of just six weeks is an extraordinary event. One factor that is clearly an estimate at this time is the loss cost trends we will see with these storms," he added. "We're monitoring state and regional markets very carefully. If we see repair and restoration cost trends that are different from our current estimates, it may require further revision to our loss estimates for these storms."



The impact on Bermudian insurers and reinsurers became clearer yesterday when Ace and Aspen revealed loss estimates for this year's hurricanes.



Ace said its catastrophe-related charges during the third quarter will be $480m pre-tax, including expected losses from the hurricanes as well as typhoons Songda, Chaba and Meari.



Aspen Insurance said its hurricane losses will be $135m, net of reinsurance and tax, with an additional $13m impact from typhoon Songda.



Chris O'Kane, Aspen chief executive, said: "Due to the rapid succession and overlapping footprint of the Florida storms, loss adjustment levels are complicating the claims process and delaying the reporting of claims at the reinsurance level. We believe losses of this magnitude are likely to have a significant impact on trading conditions, leading to increases in price and improvements in terms and conditions for wind-exposed property business in the US."