After Hurricane Ivan pummeled a wide swath of land along the Gulf of Mexico on Thursday, some U.S. insurers swamped by the third major hurricane of 2004 might find their profits gone with the wind.
Analysts at Fitch Ratings say Ivan could be the second-costliest hurricane in U.S. history.
Ivan, the latest hurricane to strike the U.S. mainland this year after hurricanes Charley and Frances, made landfall overnight, with the eye passing over Alabama and the Florida Panhandle, causing significant damage. Its effect was also felt heavily in Louisiana and Mississippi.
Early estimates suggest that the storm could create insured losses of $4 billion to $10 billion, according to Fitch and Eqecat, an Oakland-based catastrophe management firm.
“It may lead some companies to have losses this quarter,” said Alain Karaoglan, an equity research analyst at Deutsche Bank Securities Inc. who specializes in the insurance industry.
“The industry was having a very good year. These losses will reduce profitability in some areas. [But] I don’t think the whole industry will lose money,” said Rod Fox, cheif executive at Benfield, the world’s largest independent reinsurance broker.
Although it is early to tally up insured losses in the wake of Ivan, Fitch warned that Ivan may supplant Charley — which generated about $6.8 billion in insured losses — as the second-costliest hurricane in U.S. history after 1992’s Hurricane Andrew.
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