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Reinsurers stand to gain in weak hurricane season

Sarah Gardner Aug 28, 2006
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Reinsurers stand to gain in weak hurricane season

Sarah Gardner Aug 28, 2006
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BRIAN WATT: Hurricane Katrina took a big bite out of the insurance industry last year and that included reinsurers, but those guys stand to gain fairly well this season. Sarah Gardner explains.


SARAH GARDNER: Reinsurers ended up paying about 45 percent of the losses from last year’s hurricanes.

Since Katrina, many reinsurers have more than doubled their rates and raised deductibles in coastal areas.

Morning Star analyst Justin Fuller says if Mother Nature doesn’t pull a repeat of 2006, those companies stand to gain.

JUSTIN FULLER:“If the wind doesn’t blow and the ground doesn’t shake the reinsurance industry is gonna deliver very pleasing returns for their shareholders this year.”

Robert Hartwig, chief economist for the Insurance Information Institute, says higher prices have also attracted new competition.

ROBERT HARTWIG:“There have been at least 14 new reinsurance companies that have started up, and they’ve raised seed capital to the tune of more than 10 billion dollars in the year since Hurricane Katrina.”

Hartwig says so far the hurricane season has been mild but it doesn’t officially end until the last day of November.

I’m Sarah Gardner for Marketplace.

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