Fitch Ratings: U.S. Insurance Industry Outlook for 2009 Hurricane Season

CHICAGO--(BUSINESS WIRE)--Fitch Ratings has published its annual hurricane season reference guide for insurance investors, providing analysis on the potential effects of a major storm season on large insurance companies and the industry as a whole.

The consensus among the forecasting organizations is for the hurricane season to be slightly above historical averages with around 13-15 named storms in 2009. The 2009 season, however, is expected to be less active relative to 2008.

The state of the economy and the financial market make it unclear as to whether the insurance industry would be able to 'reload' capital losses should 2009 be a major loss year. If new capital does not flow into the market should a major loss occurs, the result would be a much harder market than usually follows a loss.

Consequently, Fitch believes that risk selection, diversification and mitigation are even more important in the current environment because insurers suffering large losses may be unable to recapitalize and be forced into run-off as the result, and those insurers surviving the loss would be extremely well positioned to benefit from the resulting hard market.

Fitch's report also provides an extended analysis of the Florida insurance market, which remains strained following significant losses in 2004-05 and the deteriorated regional economy. There remains uncertainty as to whether the Florida Hurricane Catastrophe Fund (FHCF) could meet all of its obligations in a severe storm season.

Fitch's 'Hurricane Season 2009: A Desk Reference for Insurance Investors' is available on the Fitch web site at www.fitchratings.com. The primary purpose of the report is to publish market share statistics for the top 10 personal and commercial insurers in each of the 18 coastal U.S. states. These statistics enable readers to quickly assess the effect of a major storm on insurers. If there is a major U.S. hurricane in 2009, these tables give investors a quick way to calculate the approximate gross hurricane loss by insurer in the early hours following an event, before companies begin to release loss estimates.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.