Isabel's Effects Hit Insurers' Bottom Line

By Gary Mogel

NU Online News Service, Oct. 1, 1:49 p.m.EDT?Insurers earnings are beginning to reflect the hitthey took from Hurricane Isabel, according to third-quarterfinancial estimates released by the companies.

Ohio Casualty Corp., based in Fairfield, Ohio, noted in a pressrelease that it suffered pre-tax financial statement catastrophelosses of $16 million in the third quarter, $9 million of which isattributable to Isabel. The insurer has had about 2,000 claims fromthe hurricane so far.

Donegal Insurance Group, based in Marietta, Pa., reported ahurricane-related $650,000 reduction in net income in itsthird-quarter earnings announcement. "The company's underwritingefforts to limit catastrophe exposures and our reinsurance programsare responding as designed and will limit the net financial impactto the company," noted CEO Donald H. Nikolaus in a statement.

The Midland Company, based in Cincinnati, Ohio, expects pre-taxfinancial losses of $10-to-$15 million related to the storm,according to a statement issued by the company.

"Our second quarter was marked by catastrophe losses that werenearly twice the normalized average and our third quarter is nowbeing negatively impacted by Hurricane Isabel," said president andCEO John W. Hayden in the statement.

Unitrin Inc., based in Chicago, noted in its third-quarterearnings report that it estimates $6 million in after-tax financialstatement losses from Isabel.

Safeco Corporation, based in Seattle, Wash., estimated $10million in Isabel-related after-tax financial losses as part of anannouncement of the company's restructuring.

Cincinnati Financial Corp. is expecting a $15 million loss inthird-quarter earnings as a result of the hurricane, according toits quarterly earnings report. The company is anticipating about1,700 claims related to the storm.

Jay Cohen, an insurance analyst with Merrill Lynch & Co. inNew York, said that there was "nothing very dramatic" in theearnings reports so far.

"Isabel was not a particularly huge event for CAT-relatedlosses," Mr. Cohen noted. "It will be well within what is normalfor the third quarter."

Mr. Cohen indicated that $10 million was not a big hit forSafeco, even given their current financial difficulties.

"Of course, what is small for one insurer may be big foranother, depending on the company's size and policyholder'ssurplus," Mr. Cohen pointed out.