September 19, 2005 by Canadian Underwriter
Risk Management Solutions, which does catastrophe modeling, is reporting a more detailed breakdown of overall industry losses in the wake of Hurricane Katrina, a Category 4 hurricane that all but decimated New Orleans in late August.
RMS is projecting industry-wide losses of between US$40 billion and $60 billion as a result of Katrina.
The flooding of New Orleans would account for about $15 billion to $25 billion of this total, says RMS. Total economic losses are expected to exceed $125 billion.
RMS has broken down the losses based on various events arising out of Katrina, including the following:
– Florida landfall of Katrina – $1 billion to $2 billion
– Second landfall of Katrina (Louisiana, Missouri, Alabama) – $20 billion to $25 billion
– New Orleans Flood – $15 billion to $25 billion
– Offshore energy (offshore oil and gas platforms) – $2 billion to $5 billion
– Additional Sources (such as higher reconstruction costs) – $2 billion to $3 billion
In the meantime, reinsurers are continuing to report losses on the order of hundreds of millions of dollars based on the damage Katrina caused in Louisiana, Missouri, and Alabama.
Industrial property insurer FM Global recently reported its potential net liability after Katrina might be up to US$300 million in pre-tax losses.
The Arch Capital Group Ltd.(NASDAQ:ACGL)- a Bermuda-based reinsurer with more than US$2.8 billion in capital said it is predicting a third-quarter, after-tax losses of between US$110 million and $160 million.