Help with 2005 Hurricane Costs

[William Combes]

I'm working on a presentation for work and I'm looking for the costs for the 2005 Hurricane Season. Anyone know of any resources with preliminary information or data? Any newspaper articles? Any info is appreciated.

- Bill

 

[Walker Ashley]

For insured losses, check recent ISO press releases: http://www.iso.com/press_releases/

The Hurricane Center normally doubles these estimates to come up with a "total" loss. This "doubling" may not work for Katrina b/c of the large number of homes uninsured or w/out gov't flood insurance, which I believe is not counted in the ISO estimates.

 

[B Ozanne]

I know this is of little help, but I own stock in a private re-insurance company. Pre-Katrina the book value of the company was $190 per share, as of the latest revision today it is down to $18.50. I'm expecting the book value of the company to be revised down to $0 within a month. You don't have to donate money to charity to help the hurricane victims!

Gives you a good idea about insured losses for this storm. In the spring of 2004, book value was around $190 too. By the end of hurricane season '04 it was down to $90. So it was just getting back to 2004 levels before Katrina hit. I don't think its coming back this time.

 

[Jeff Snyder]

Originally posted by B Ozanne+--><div class='quotetop'>QUOTE(B Ozanne)</div>

I know this is of little help, but I own stock in a private re-insurance company. Pre-Katrina the book value of the company was $190 per share, as of the latest revision today it is down to $18.50. I'm expecting the book value of the company to be revised down to $0 within a month. You don't have to donate money to charity to help the hurricane victims!

Gives you a good idea about insured losses for this storm. In the spring of 2004, book value was around $190 too. By the end of hurricane season '04 it was down to $90. So it was just getting back to 2004 levels before Katrina hit. I don't think its coming back this time.[/b]

Interestingly enough, I own stock in a commercial insurance company, and the stock price has risen nicely since summer. Granted, there were a few non-wx related reasons for it to be relatively low in the first place, but it's risen nicely since summer. There was an article on CNN MONEY about how stock prices for insurance companies actually tend to rise after major disasters, however counterintuitive that may seem... I guess many investors get excited about increased rates they know are imminent or inevitable following an active hurricane season.

Originally posted by Fortune 500 / CNN / Money@
In the wake of this year's severe hurricane season, the insurance industry faces $40.8 billion in insured losses in the third quarter, according to ISO's Property Claim Services unit, making 2005 the costliest year in history for catastrophes.

Yet the S&P Property Casualty Insurance index climbed more than 6 percent in the last 3 months and year-to-date is up 14.6 percent.

So why are investors eager to plow money into an industry facing monumental losses?

Consider it a bet on the future. Given the level of estimated losses from catastrophes and the widespread expectation that severe hurricanes will be the norm for the next two decades, analysts said investors are betting that insurance companies and reinsurers will raise rates significantly in the months to come.

After hurricanes, time to buy insurers

To make this a bit more on-topic... Here's all I can offer, from the official Katrina report from the NCDC (don't have the official report from NHC yet, and probably won't for a little while):

<!--QuoteBegin-NCDC Katrina Report

The flooding of New Orleans, LA following the passage of Katrina was catastrophic, resulting in the displacement of more than 250,000 people, a higher number than during the Dust Bowl years of the 1930’s. As of September 26, the death toll stood at 1075 and damage estimates were in excess of $100 billion.

http://lwf.ncdc.noaa.gov/oa/reports/tech-r...ort-200501z.pdf

 

[William Combes]

Thanks for the Tech Report link Jeff. This is a great addition to my research. I actually work for a student loan guarantor and we are working on scenerio planning for the future.