The potential financial impact of Hurricane Rita will be magnified as it comes four weeks after the devastating effects of Hurricane Katrina, according to AM Best.
The rating agency has come up with a list – including all reinsurers – of those organisations likely to suffer the greatest losses from Rita, the current projected size and intensity of which could result in sizeable insured losses.
AM Best said in a statement that "given the significant volume of claims from Katrina and the potential losses associated with Hurricane Rita, a number of companies' claims operations may be stressed, leading to greater risk of errors, bad faith claims and undetected fraud.
"AM Best's initial focus will be on those organisations viewed as a priority as a result of various market share reviews. While this approach is somewhat limited, particularly given the geographic spread associated with Texas and the impact of reinsurance, it provides an initial framework for determining which companies should receive the highest priority within our review. However, the inclusion of any company in this press release does not indicate anything about the company's AM Best Rating. It merely indicates that there is a need to look closer at the company's exposure to potential losses from Rita.
"Listed below are those companies that could have a high potential market share loss relative to surplus, depending on the size of losses from Rita. Those that are currently rated by AM Best will be given a priority review based on this measurement:
· All reinsurers
· American Strategic Insurance Group
· Apex Lloyds Insurance Company
· Beacon Insurance Group
· Church Mutual Insurance Company
· Colonial Insurance Group
· Columbia Insurance Group
· Commercial Alliance Insurance Company
· Cypress Holdings Group
· Delta Lloyds Insurance Company of Houston
· Home State Insurance Group
· NLASCO Group
· Old American County Mutual Fire
· Republic Companies Group
· Southland Lloyds Insurance Company
· State Farm Lloyds
· Titus Group
· Triangle Insurance Company
· US Lloyds Insurance Company
· Vesta Insurance Group
· Wellington Insurance Company
"While there may be exposure to hurricane losses, none of the ratings on these companies should be considered at risk at this time until a review of all related issues is completed by AM Best."