Fitch: Hurricane Season Is Here – A Desk Reference for Insurance Investors

May 28, 2008

Houston Chronicle--May 27, 2008

To coincide with the official start of the U.S. Atlantic coast hurricane season June 1st, Fitch Ratings today released the third installment of its annual hurricane season desk reference guide, which, similar to all prior Fitch editions, contains the most recent forecasts for the upcoming hurricane season from leading forecasters and analyzes the top-10 insurers by market share for each of the 18 coastal U.S. states in both personal and commercial insurance.

The Fitch Hurricane Guide enables readers to quickly assess the effect of a major storm on insurers. If there is a hurricane in 2008, statistical tables from the guide will give investors a quick way to calculate the approximate gross hurricane loss by insurer in the early hours following an event, before companies begin to release loss estimates.

As before, Fitch includes background information on U.S. hurricanes and key terms as appendices to this report. Additionally, Fitch continues to follow developments in the litigation stemming from the 2004-2005 hurricane seasons and new proposals for New York catastrophe reserves.

What’s more, in a special added section for 2008, Fitch is examining the 70th anniversary of the ‘Long Island Express,’ a major hurricane which ploughed through New York’s Long Island and New England in 1938.

“Forecasts for 2008 call for an above-average hurricane season,” said Donald F. Thorpe, senior director, Fitch Ratings. “2008 follows a season in which there were little or no hurricane losses for most insurers. In fact, 2007 was the second consecutive year in which high levels of hurricane activity were predicted and insured losses were minimal. Fitch believes this situation has negative implications for insurer solvency and profits because it fosters complacency on the part of both policyholders and insurers. More importantly, it provides political ammunition to those who would weaken long-term industry solvency for near-term insurance price reductions.”

Fitch’s comprehensive guide includes the new proposals on catastrophe reserves; a FAQ; statistics on the most costly hurricanes in the U.S.; hurricane-related deaths in the U.S.; and information on insurer market share state-by-state.

A few notable items included in the Fitch report:

–Hurricanes can strike the East Coast anywhere from Texas to Maine;

–The last time a hurricane made a direct hit on New York State was Hurricane Gloria in 1985 (23 years ago). The average is 13 years;

–The last time a hurricane made a direct hit on New York City was 1903 (105 years ago); and

–After the 1938 Long Island hurricane, it was reported that an estimated 750,000 chickens were killed. If that event repeated today, the economic costs would be significantly different.

The Special Report, ‘Hurricane Season 2008: A Desk Reference for Insurance Investors’, is now available on under the following headers: Financial Institutions > Insurance > Special Reports.

Fitch’s rating definitions and the terms of use of such ratings are available on the agency’s public site, Published ratings, criteria and methodologies are available from this site, at all times. Fitch’s code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the ‘Code of Conduct’ section of this site.