After an appalling year of hurricane losses insurers are preparing for the worst, but when the storms clear there could be good times ahead. James Sullivan reports.

' It couldn't last forever, and after several years of virtual hurricane-free autumns, the global property and casualty market has suffered an appalling run of severe losses. The hurricanes in question - respectively Charley, Frances, Ivan and Jeanne- all hit during August and September and will have a devastating effect on the industry. Colliding with the dreaded eastern seaboard of the US as they did, and given the severity of the hurricanes themselves, total insured losses have been put as high as $44bn. If true, this figure would be one of the biggest losses the global industry has ever experienced. After all, claims from Hurricane Andrew in 1992, the single most costly natural disaster in history, were $15.5bn - or $20bn at today's prices. But the overall picture may not be as bad as the enormous loss exposure might at first suggest. As with 9/11, there is a feeling among insurers and reinsurers that the hurricanes may perversely have come at the right time in the cycle and will act to reshape the downward curve. With the property market in particular having started to soften in 2003 and with rates declining in 2004 by some 20%, the hurricanes may yet act to put a much needed brake on softening conditions and could even act to push prices up again.According to Swiss Re, which is facing one of the biggest total losses with an estimated exposure - including Typhoon Songda in Japan - of some $750m, the industry can look forward to changes in rating over the next few months. "The hurricanes will have a positive effect on renewals in property," says a spokesman. But, he stresses that the picture is still far from clear: "We still need to see what happens, as Jeanne took the same track as Frances, so we'll need to see what happens from our cedants on the claims front. "There's still uncertainty over the extent of claims. But the hurricanes will help to harden ratings."Lloyd's exposure to the hurricanes, as one would expect of a market with such a large US property exposure, will be even worse than Swiss Re's, with a projected net figure of about £1.3bn. But, according to a spokeswoman, the impact of this year's natural catastrophes will not be as devastating as in years past. "Despite one of the worst hurricane seasons on record, Lloyd's is still on track to make a good profit in 2004, subject obviously to any further major catastrophe in the fourth quarter."But despite such optimism that the market will be able to cope with the losses, will they have a positive rating impact? Barrie Cornes, an analyst at Cheuvreux, certainly thinks so. "Lloyd's losses look fairly chunky," he comments. "And they might help with the rating environment in 2005."But he cautions that such a large hit will impact on profitability. He adds that much of the drive behind any change in rates will be caused by a reduction in capacity.

Loss exposureAmlin: pre tax profit down by £30mSVB: pre tax profits down by not more than £10mChaucer: pre tax profits down by £10m to £15mKiln: pre-tax profits down by £10m to £15mBrit: pre-tax profits down by £35mWellington: pre-tax profits down by £15mHiscox: operating profit down by £25mAce: pre tax profit down by $480m.

Hurricane factsThe terms "hurricane" and "typhoon" are regional names for a strong "tropical cyclone". A tropical cyclone is the generic term for a non-frontal synoptic scale low-pressure system over tropical or sub-tropical waters. Hurricanes are rated in categories from one to five, where one is minimal, and five is catastrophic. The Atlantic hurricane season officially runs from 1 June to 30 November. In early August, forecaster Tropical Storm Risk predicted that this season there was an 86% probability of an above-normal Atlantic hurricane activity and a 70% probability of above-normal U.S. landfalling hurricane activity.