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Q2 losses to hit US cat underwriters

Second quarter US cat losses, which the ISO has revised upwards to $6.03bn, are likely to hit the bottom line of personal as well as commercial lines insurers, according to the latest analysis from Fox-Pitt, Kelton.

Releasing its latest figures this week, the ISO’s Property Claims Services unit now expects second quarters cat losses to cost (re)insurers $6.025bn, resulting from 16 catastrophes in 27 states and nearly double the number of catastrophes in the first quarter. ISO’s previous estimate was $5.8bn.

At $1.08bn, Texas topped the list of the five most severely affected states, followed by Minnesota at $810m, Kansas at $578m, Arkansas at $450m, and Oklahoma at $425m.

Some US companies have already pre-announced cat losses resulting for tornado and hail activity in the mid-west, including Cincinnati Financial, Harleysville Insurance, and State Auto Financial Corporation.

However, according to the authors of the Fox-Pitt report, they also expect that some personal lines companies could be affected by these storms, such as Allstate, though so far the group has not made any public disclosure and Fox-Pitt said there could be some offset in favourable auto frequency.

On crop losses related to the storms, some companies may take the conservative route, they note, and put up some IBNR for crop insurance-related losses caused by the recent floods, though actual losses will not be determined until closer to end of 2008. Insurers in the firing line for such losses are the likes of Ace, Endurance, XL Capital, Max Re, PartnerRe and Renaissance Re.

In the public domain, Bermudian (re)insurer Argo Group International expects a hit of between $16-18mn for the second quarter of 2008, the company revealed last week. It said that 15 events including tornadoes and floods brought severe and widespread damage, particularly in the Mid West, during the quarter.

Argo added that in the same quarter of 2007, pre-tax losses attributable to six severe US weather events totalled approximately $3.1mn.

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