Sunday, August 28, 2005
Hurricane Katrina gets ready to hit hard
Worries for my portfolio this weekend. The US hurricane season, which had so far remained largely innocuous to my insurance holdings, has started for real this weekend with the arrival of hurricane Katrina.
Katrina has already hit Florida as a category-1 hurricane and is worryingly gathering strength. Yesterday, forecasters were warning Katrina could reach a category-4 but today, as the eye of the hurricane moves into the Gulf of Mexico, the latest prognosis is that Katrina has now hit category-5, and is expected to hit land in Louisiana within the next 24 hours. Only three category five hurricanes have hit the US in history. As the mayor of New Orleans ordered an evacuation of hundreds of thousands of people, insurers like Chaucer and SVB will be bracing themselves for large claims.
With around six weeks of the hurricane season remaining, I had hoped my companies would have fared much better this time round, making the comparables at the full-year stage impressive against 2004's numbers. However, a representative at Chaucer recently likened Atlantic hurricanes to buses. You can wait a long time with no apparent sign of any likely to arrive and all of a sudden four can turn up one after the other.
Though last years season remains extraordinarily unpleasant, Katrina has scotched any chance the insurers had of emerging from the 2005 storm season unscathed. For investors in the sector, we must remain watchful our companies can remain within their reinsurance budgets, a breach of these would force a reserving decision using net company assets, as recently was announced by Goshawk in the light of 2004's hurricane Ivan and SVB's cataclysmic slip-up in asbestos underwriting in America.
The Artful Dodger
Katrina has already hit Florida as a category-1 hurricane and is worryingly gathering strength. Yesterday, forecasters were warning Katrina could reach a category-4 but today, as the eye of the hurricane moves into the Gulf of Mexico, the latest prognosis is that Katrina has now hit category-5, and is expected to hit land in Louisiana within the next 24 hours. Only three category five hurricanes have hit the US in history. As the mayor of New Orleans ordered an evacuation of hundreds of thousands of people, insurers like Chaucer and SVB will be bracing themselves for large claims.
With around six weeks of the hurricane season remaining, I had hoped my companies would have fared much better this time round, making the comparables at the full-year stage impressive against 2004's numbers. However, a representative at Chaucer recently likened Atlantic hurricanes to buses. You can wait a long time with no apparent sign of any likely to arrive and all of a sudden four can turn up one after the other.
Though last years season remains extraordinarily unpleasant, Katrina has scotched any chance the insurers had of emerging from the 2005 storm season unscathed. For investors in the sector, we must remain watchful our companies can remain within their reinsurance budgets, a breach of these would force a reserving decision using net company assets, as recently was announced by Goshawk in the light of 2004's hurricane Ivan and SVB's cataclysmic slip-up in asbestos underwriting in America.
The Artful Dodger
Comments:
Post a Comment
