Swiss Re Warns of Bad 2006 Hurricane Season

NEW YORK CITY-”It looks like it’s going to be another bad year for hurricanes,” said Andrew Castaldi, head, catastrophe and perils unit for Swiss Re during the reinsurer’s annual year-end Economic and Insurance Industry Review 2005/Outlook 2006. He cited various reasons for increased hurricane severity and frequency, including changes in population density and annual, multi-decadal, long-term climate oscillations. He noted that the Northeast is overdue for a major hurricane.

Patrick Mailloux, president and CEO, Swiss Re America Corp., said there is a greater existing catastrophic exposure than was originally believed by many. “Reinsurance programs may need to be re-thought, which is likely to lead to an overall increased demand for reinsurance.” He said the unprecedented hurricane season with hurricanes Katrina, Rita, and Wilma caused insured losses of more than $60 billion.

“Security continues to be a concern and flight to quality is anticipated to favor large and diversified players in the long run.” He said that the magnitude of losses has changed the landscape adding a new perception of risk and of how much capital is needed. “They [the hurricanes] were very expensive reminders.”