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Fitch Report Tells Insurers to Expect Above-Average Hurricane Season

Source: Business Week

Posted on 27 May 2011

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Insurers have already incurred record losses this year from earthquakes, cyclones, flooding and tornadoes. Now Fitch Ratings, in its annual hurricane season report published Thursday, is saying to expect above average hurricane frequency with several U.S. landfalls possible.

The report said industry insured losses in the first half of 2011 could approach $10 billion. Earthquakes in Japan and New Zealand, flooding in Australia and tornadoes in the Midwest and South in the United States contributed to the losses so far.

"Many reinsurers have already exceeded their 2011 catastrophe budget prior to hurricane season," Fitch analysts said in a statement.
While the insurers have withstood recent losses, a hurricane that causes substantial insured losses could strain company capital positions, Fitch said.

From six to 10 hurricanes are expected this year, with three to six classified as major hurricanes, according to estimates by the National Oceanic and Atmospheric Administration and other forecasting groups.

The estimated probability of a hurricane hitting the Gulf Coast is 80 percent, and for the Florida and East Coast it's 81 percent, the Fitch report said, citing statistics from Colorado State University professors.

The 2011 hurricane season runs from June 1 through Nov. 30.

In 2010, although there were 19 named storms, none made landfall in the United States and they caused little damage.