Reinsurance: hurricanes may stop slide in rates.

Although it appears reinsurers will not carry a heavy loss burden from the double-hit of hurricanes Charley and Frances, the storms may at least help to stop the slide in property reinsurance pricing going into the fall renewals negotiating season.

Thus far, two major reinsurers have released preliminary estimates of their losses related to Frances, the second hurricane to sweep across the Sunshine State in three weeks. Swiss Re Group said it expects aggregate claims from Frances and Hurricane Charley--which hit Florida on Aug. 13, at below $300 million pretax. About $200 million of that loss estimate is related to Charley.

German reinsurer Hannover Re said losses from Frances will likely be in the "midrange double-digit euros" range. Hannover Re, which had previously estimated its maximum losses from Charley at 100 million euro (approximately $121.8 million), said it has revised that pretax loss estimate downward, to about 70 million euro.

Both Swiss Re and Hannover Re said losses related to those two storms should not affect their financial outlook for 2004.

Reinsurers have been spared huge hits from the one-two punch of Charley and Frances, thanks to the Florida Hurricane Catastrophe Fund, a state-mandated backup program for insurers instituted in the wake of 1992's Hurricane Andrew. The catastrophe fund has taken much of the private reinsurance industry out of a median range of hurricane loss exposure--between roughly $4.5 billion and $10 billion in losses.

The fund has been a significant "shock absorber" between reinsurers and the storm damage in Florida this year, said Paul Karon, president and chief operating officer of reinsurance broker Benfield plc's North American operations. "Because of the cat fund, these are not significant events in terms of ceded losses for reinsurers," he said.