III - HURRICANES

DEFRAYING THE ECONOMIC COSTS OF DISASTERS

THE 2006 AND 2007 ATLANTIC HURRICANE SEASONS

In contrast with the 2005 Atlantic hurricane season, which was the most active since record keeping began in 1851 with 27 named storms, the 2006 hurricane season was close to average, with nine named storms (the average is 11). Five of those storms became hurricanes (the average is six). None of the hurricanes struck the United States, the first time since 2001. However, three named storms made landfall as tropical storms. Tropical Storm Ernesto, which made landfall twice in Florida and then in North Carolina, caused an estimated $245 million in insured losses in eight states in late August and early September, according to PCS.

The 2007 hurricane season produced 15 named storms, six of which became hurricanes. Only one hurricane, Humberto, hit the United States, the first to strike the country since Hurricane Wilma in October 2005. Humberto struck Texas and Louisiana on September 13 and caused one fatality as well as wind and rain damage in Texas but below catastrophe loss levels as defined by ISO. In addition, Tropical Storm Gabrielle made landfall in North Carolina on September 9.

There were six catastrophic hurricanes in both 2005 and 1985, the highest annual tallies since 1949, the earliest year tracked by ISO. No catastrophic hurricanes hit the U.S. in 2006.

CATASTROPHIC HURRICANE CLAIMS AND LOSSES,
IN THE UNITED STATES, 1998-2006 (1)

	1998	1999	2002	2003	2004	2005	2006
Frequency	2	5	1	2	5	6	0
Claims	729,450	695,850	133,700	527,800	2,259,150	3,315,550	NA
Personal (2)	72.8%	73.9%	83.8%	82.3%	73.6%	70.0%	NA
Commercial (2)	15.7%	17.2%	3.0%	4.1%	13.4%	9.3%	NA
Vehicles	11.5%	9.0%	13.2%	13.5%	12.9%	20.7%	NA

Losses ($ millions)	$3,315	$2,315	$430	$1,775	$22,900	$58,337	NA
Personal (2)	34.9%	39.4%	66.5%	74.9%	65.7%	49.8%	NA
Commercial (2)	59.8%	55.6	26.7%	14.0%	29.6%	44.7%	NA
Vehicles	5.4%	5.0%	6.7%	11.1%	4.6%	5.5%	NA

Average claim severity
Personal (2)	$2,176	$1,773	$2,554	$3,061	$9,049	$12,515	NA
Commercial (2)	$17,331	$10,769	$28,750	$11,376	$22,337	$84,953	NA
Vehicles	$2,124	$1,856	$1,638	$2,755	$3,626	$4,698	NA
(1) ISO's Property Claim Services unit currently defines catastrophes as events causing at least $25 million in direct insured losses to property and affecting significant numbers of insurers and insureds. There were no catastrophic hurricanes in 2000, 2001 or 2006. (2) Property losses excluding vehicle losses. Note: Data are as of August 2007 and may differ from similar data shown elsewhere. Source: ISO's Property Claim Services Unit.

CATASTROPHIC HURRICANE LOSSES IN THE UNITED STATES, 1997-2006

Year	Number of catastrophic hurricanes (1)	Insured loss (2)	Year	Number of catastrophic hurricanes (1)	Insured loss (2)
1997	1	$75.4 million	2002	1	$481.9 million
1998	2	4.1 billion	2003	2	1.9 billion
1999	5	2.8 billion	2004	5	24.4 billion
2000 (3)	0	NA	2005	6	60.2 billion
2001 (3)	0	NA	2006 (3)	0	NA
(1) Major hurricanes as defined by ISO. (2) Adjusted to 2006 dollars by ISO. (3) No wind event met ISO's Property Claim Services Unit catastrophe definition of a single incident or a series of related incidents, man-made or natural disasters that causes insured property losses of at least $25 million and affects a significant number of policyholders and insurers. NA= Not applicable. Source: ISO's Property Claim Services Unit.

TOP 15 MOST COSTLY HURRICANES IN THE UNITED STATES

($ millions)

				Estimated insured loss (1)
Rank	Date	Location	Hurricane	Dollars when occurred	In 2007 dollars (2)
1	Aug. 25-30, 2005	AL, FL, GA, LA, MS, TN	Katrina	$41,100	$43,625
2	Aug. 24-26, 1992	FL, LA	Andrew	15,500	22,902
3	Oct. 24, 2005	FL	Wilma	10,300	10,933
4	Aug. 13-14, 2004	FL, NC, SC	Charley	7,475	8,203
5	Sep. 15-21, 2004	AL, DE, FL, GA, LA, MD, MS, NJ, NY, NC, OH, PA, TN, VA, WV	Ivan	7,110	7,803
6	Sep. 17-22, 1989	GA, NC, PR, SC, VA, U.S. Virgin Islands	Hugo	4,195	7,013
7	Sep. 20-26, 2005	AL, AR, FL, LA, MS, TN, TX	Rita	5,627	5,973
8	Sep. 3-9, 2004	FL, GA, NC, NY, SC	Frances	4,595	5,043
9	Sep. 15-29, 2004	DE, FL, GA, MD, NJ, NY, NC, PA, PR, SC, VA	Jeanne	3,655	4,011
10	Sept. 21-28, 1998	AL, FL, LA, MS, PR, U.S. Virgin Islands	Georges	2,955	3,758
11	Oct. 4, 1995	FL, AL, GA, NC, SC, TN	Opal	2,100	2,856
12	Sep. 14-17, 1999	NC, NJ, VA, FL, SC, PA, 10 other states	Floyd	1,960	2,439
13	Sep. 11, 1992	Kaui and Oahu, HI	Iniki	1,600	2,364
14	Sep. 5, 1996	NC, SC, VA, MD, WV, PA, OH	Fran	1,600	2,114
15	Sep. 15-16, 1995	PR, U.S. Virgin Islands	Marilyn	875	1,190
(1) Property coverage only. (2) Adjusted to 2007 dollars by the Insurance Information Institute. Source: ISO's Property Claim Services Unit; Insurance Information Institute.

The chart showing the Ten Most Costly Hurricanes in the United States on page __ ranks historic hurricanes based on their insured losses, adjusted for inflation. The chart below uses a computer model to estimate the losses that major hurricanes of the past would produce today according to current exposures. AIR Worldwide's U.S. hurricane model simulates the specific meteorological characteristics of each storm, taking into account the current number and value of exposed propertiesin 2005, when the analysis was conducted.

ESTIMATED INSURED LOSSES FOR THE TOP TEN HISTORICAL
HURRICANES BASED ON CURRENT EXPOSURES (1)

($ billions)

Rank	Date	Event	Insured loss (current exposures)
1	Sep. 18, 1926	Miami Hurricane	$80
2	Aug. 24, 1992	Hurricane Andrew	42
3	Aug. 29, 2005	Hurricane Katrina	41 (2)
4	Sep. 21, 1938	1938 Long Island Express	35
5	Sep. 9, 1965	Hurricane Betsy	34
6	Sep. 9, 1900	Galveston Storm of 1900	33
7	Sep. 17, 1928	Great Okeechobee Hurricane	33
8	Sep. 10, 1960	Hurricane Donna	26
9	Sep. 17, 1947	1947 Fort Lauderdale Hurricane	24
10	Sep. 16, 1945	1945 Homestead Hurricane (#9)	20
(1) Modeled loss to property, contents and direct business interruption and additional living expenses for residential, mobile home, commercial and auto exposures as of December 31, 2005. (2) ISO estimate. Source: AIR Worldwide Corporation.