Bermuda-based IPC Holdings, Ltd. announced that it expects third quarter 2005 earnings to be significantly impacted by Hurricane Katrina.
According to a company release, “Based upon a preliminary analysis of the limited initial information available, we anticipate the net impact of Hurricane Katrina losses on our net income in the third quarter to be in the range of $350 million to $600 million. Hurricane Katrina is potentially the largest property loss in insurance and reinsurance history.
“The estimated range has been based on industry insured loss estimates, including marine and offshore energy losses, of $30 billion to $40 billion; output from both industry and proprietary models, including pre-event, modeled exposure data provided to us by client companies; a review of contracts potentially affected by the event and limited preliminary information received from both clients and brokers. It has also been assumed that underlying policy terms and conditions are upheld during the loss adjustment process.
“The unique circumstances and severity of this tragic and devastating catastrophe, including the extent of flooding and limited access by claims adjusters, introduce additional uncertainty to the normally difficult process of estimating catastrophe losses. This is compounded by the potential for legal and regulatory issues arising regarding the scope of coverage. Consequently, the ultimate net impact of Hurricane Katrina losses on our net income might differ substantially from the foregoing range.”
Jim Bryce, IPC’s president & CEO, noted: “While this is clearly a significant loss for IPC, it is comparatively inconsequential in relation to the tragedy and suffering being borne by the hundreds of thousands of people who have lost so much as a result of this horrendous catastrophe.”
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