Florida’s historic hurricane season is catching the attention of rating agencies, with Fitch Ratings noting that the landfall of Hurricane Jeanne now makes it likely insurers will face an assessment from Florida’s “market of last resort” for hurricane coverage. While the earlier hurricanes, Charley, Frances and Ivan, were seen as unlikely to trigger assessments to Florida’s insurers from Citizens Property Insurance Company, Fitch says such an assessment is now expected. However, this should not hurt insurer ratings, as the assessment can be built into future premiums, according to Florida regulations. In its preliminary analysis of Hurricane Jeanne’s impact, Fitch notes that the assessment will “further strain the private insurers’ liquidity at a time when it has already been strained by three major storms” and may represent a cash flow burden, even if the charge is recovered in the long run. Overall, Fitch notes, Jeanne and the other hurricanes represent a burden on primary insurers far more than their reinsurance counterparts, with the frequency of storms only adding to the disparity of the burden. One buffer is that many of the large national insurers have formed “Florida only” subsidiaries, which will bear the burden of the loss. This was exemplified by Allstate’s Florida sub, which was downgraded due to storm losses, leaving the parent company untouched by raters thus far. In its assessment, rating agency Standard & Poor’s says Jeanne “rubs salt in the wound” for U.S. p&c insurers. The rater says the storms are not creating solvency concerns such as was the case after Hurricane Andrew in 1992 (when 11 insurers were shut down by the loss burden). “Certainly, most companies’ earnings will be adversely affected by the storms, with anywhere from one quarter’s to one year’s earnings being absorbed by the losses,” says S&P credit analyst Thomas Upton. “Companies’ longer-term financial strength could eventually be diminished by the consequences of the storms, necessitating changes in their assigned ratings, but S&P expects that these changes will be modest and will be exceptions rather than the rule.” The storms do, however, test the ability of insurers to manage this kind of high claims frequency. They will also challenge primary insurers to look at the potential to reinsure against multiple storms in one season, S&P adds. The rater also expects those companies who have not created “Florida only” subs will now look at doing so.