North America/Bermuda

Reduced result

Rating agency Fitch is predicting a greatly reduced underwriting result for the US property and casualty insurance industry in 2005. Although industry trends broadly mirrored those of 2004, catastrophe losses in 2005 were much more severe. For example, Hurricane Katrina produced the largest insured loss on record for one event. Hurricane Katrina was followed by Hurricanes Rita and Wilma, which each produced substantial insured losses that, combined, will make 2005 the most devastating year ever for insured catastrophe losses. James Auden, a senior director at Fitch Ratings, said that such events increasingly point to potential annual hurricane frequency and severity that is greater than previously considered. He also noted that the losses produced by these catastrophes also demonstrated that a number of individual reinsurers were not managing their aggregate exposures relative to capital as tightly as previously assumed, leading to several recent rating downgrades.