Hurricane Rita may cost insurers, including Allstate and St. Paul Travelers, $9 billion to $18 billion, less than half their estimated expense...
Hurricane Rita may cost insurers, including Allstate and St. Paul Travelers, $9 billion to $18 billion, less than half their estimated expense for Katrina, a storm modeler said.
Insurers are facing their most expensive hurricane season ever, with Katrina alone estimated to cost $40 billion to $60 billion, according to Risk Management Solutions, another modeler.
St. Paul Travelers insures the most commercial properties in the state, followed by Zurich and Chubb, according to a report from Merrill Lynch.
State Farm Mutual Automobile Insurance, owned by its policyholders, is the biggest insurer of homes in Texas, then Allstate and Zurich Financial Services’ Farmers Insurance unit, Merrill said.
Most Read Stories
- Russian hackers tried to access Washington’s voting systems, officials say
- California brain surgeon faces more child sex abuse charges
- Boeing seeks quick legal fix to stop Bombardier
- Seattle’s real Spider Man sets us straight: They’re not out to get you VIEW
- UW cornerback Byron Murphy expected to miss 6 weeks with a broken foot
Combined claims of as much as $78 billion would deplete 19 percent of the $402 billion in surplus, or cushion, that U.S. property and casualty insurers have for unexpectedly high claims, according to Insurance Services Office.
As much as $18 billion in losses “should not be devastating to the industry,” said Brian Schneider, an analyst at Fitch Ratings in Chicago. “They will be able to handle it.”
Safeco, based in Seattle, has a small share of the Texas market, ranking 19th with 1.36 percent of the state’s auto, homeowners and commercial policies.
It deployed more claims representatives to Safeco’s southwest regional office in Richardson, near Dallas.
“They’re there, and depending on which way the storm turns, they’ll put all their resources in the direction of the storm,” spokesman Paul Hollie said yesterday. He would not say how many extra workers were sent to Texas.
Safeco shares rose $1.08 a share yesterday to $52.57. That’s down 2.4 percent from its closing price of $53.87 a week earlier.
Investors had been valuing insurance stocks as if there would be $10 billion to $20 billion in insured losses from Rita, Wachovia analyst Susan Spivak said in a report yesterday.
Should Rita cost $10 billion, the storm would cut Allstate’s profit by $486 million, on top of a $2.4 billion cost for Katrina, said Paul Newsome, an analyst at A.G. Edwards.
Eqecat, based in Oakland, Calif., yesterday estimated Katrina would cost $26 billion to $43 billion. It made landfall in Louisiana on Aug. 29 as a Category 4 storm.
Insurers cover an estimated $740 billion of property along the coast of Texas, more than double the $330 billion insured along the edge of Louisiana, Mississippi and Alabama, said AIR Worldwide, a third modeler. AIR and Risk Management haven’t estimated Rita’s damage.
St. Paul Travelers said yesterday that Katrina may cost the company about $800 million.
Allstate has 800 claims adjusters on hand for Rita and 2,500 handling Katrina claims, said spokesman Michael Trevino. St. Paul Travelers has 600 ready to move into areas that may be hit by Rita in addition to another 600 in Louisiana, Alabama and Mississippi dealing with Katrina, said spokeswoman Jennifer Wislocki.
“St. Paul Travelers is financially strong, and we are committed to honoring the promise that we have made to our customers,” Wislocki said.
Seattle Times business reporter Melissa Allison contributed to this report.