The ripple effects from Hurricane Wilma continue to impact the insurance industry with the announcement of losses by Odyssey Re and the downgrade of Omega Insurance Company by A.M. Best.
Stamford, Conn.-based insurer Odyssey Re Holdings Corp. said it lost $125 million before taxes from Hurricane Wilma during the fourth quarter of 2005. The figure is net of applicable reinsurance and reinstatement premiums. The after-tax net loss stands at $81 million.
Odyssey said the losses are expected to be primarily from Florida and Mexico.
In a statement last week, Odyssey said that its loss estimates "reflect a significant amount of judgment and consider, among other factors, industry loss predictions, a review of in-force contracts, catastrophe modeling of estimated losses and preliminary feedback from clients."
Odyssey Re is a worldwide underwriter of property and casualty treaty and facultative reinsurance, as well as specialty insurance.
In its third quarter financial report, released in October, the company reported losses from Hurricanes Katrina and Rita totaling $178.8 million after-tax.
For the third quarter, the company recorded loss of net income of $97 million, or a loss of $1.51 per share, compared to net income of $18 million, or 27 cents per share, in 2004. This was based on total revenue of $728.2 million, an increase of $60 million over the $668 million reported in 2004.
For the nine months, the company's net income stood at a loss of $18 million, or loss of 28 cents per share, compared to net income of $136 million, or $1.97 per share in 2004. Revenues for the nine months were up $61 million, from $1.93 billion to $1.99 billion.
Omega Insurance Company of Gainesville, Fla., was downgraded by the A.M. Best Co., last week.
The Oldwick, N.J.-based rating agency changed the financial strength rating of Omega to "B-double plus-Very Good" from "A-minus-Excellent." The rating remains under review with negative implications, Best added.
Best said the downgrade is attributable to the deterioration of risk-adjusted capitalization, primarily as a result of the estimated losses associated with Hurricane Wilma. The rating service said it placed Omega's rating under review with negative implications on Nov. 7.
Best said it continues to review the Omega's various capital enhancement initiatives. "While management's capital replenishment plan will result in improved risk-adjusted capitalization, it is no longer supportive of the former rating," Best said.
If Omega's recapitalization plan is not fully successful Best warned that there would likely be further downgrade.
According to National Underwriter's HighlineData, in 2004 Omega reported loss in net income of $13.5 million.
Omega is part of the Tower Hill Insurance Group based in Gainesville, Fla. The company is privately owned.
A spokesman for Omega said agents were advised of the downgrade and that the company continues to support the Florida market. He said the company is working to make sure that it's underwriting is properly funded and "that surplus levels are more than sufficient."
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