Insurers including Warren Buffett’sBerkshire Hathaway Inc. and American International Group Inc. benefited from the absence of third-quarter storms this year after paying $12.5 billion in claims on Hurricane Ike in 2008.
The hurricane season has yielded a single U.S. landfall, Tropical Storm Claudette, which struck Florida last month. By this time in 2008, Hurricane Dolly had hit Texas, Gustav came ashore in Louisiana, Tropical Storm Hanna swiped the Carolinas and Ike lashed nine states, killing more than 100 people.
The calmer quarter will boost results for insurers after the recession eroded the value of their holdings and caused customers to reduce spending. The storms last year contributed to the industry’s $9.9 billion net loss in the third quarter, according to Insurance Services Office Inc.
“The insurance companies are going to have just phenomenally good earnings this quarter because of the lack of hurricanes,” said Michael Paisan, an analyst at Stifel Nicolaus & Co. Also, he said, “you are going to get some boost from the financial markets” as insurers’ portfolios recover.
The Atlantic hurricane season lasts from June 1 to Nov. 30, with the greatest activity usually in September, the National Oceanic and Atmospheric Administration said on its Web site. The season has so far defied NOAA’s May prediction of four to seven hurricanes. Bill and Fred have been the only hurricanes to form in the Atlantic this year. Both missed the U.S.
“The last time we had a year that quiet was in 1997,” said Jeff Masters, director of meteorology at Weather Underground Inc., an Internet weather service based in Ann Arbor, Michigan. “As far as damage goes, you can pretty much say coastal erosion from Bill is all we’ve had.”
The 2008 hurricane season was the most expensive since 2005, when Katrina, Wilma and Rita contributed to more than $60 billion in U.S. catastrophe claims, according to ISO.
The industry also paid out last year after wildfires in California and a record number of tornadoes in the first six months. This year, about 1,057 tornadoes have struck the U.S., down about 34 percent from the first nine months of 2008, according to preliminary data from the National Weather Service. This year’s tally may drop further when the service investigates storm data and compiles official statistics....MORE