Rita insured losses seen up to $6 bln

By Ben Berkowitz

NEW YORK (Reuters) – Hurricane Rita caused anywhere from
$2.5 billion to $6 billion in insured losses in eastern Texas
and western Louisiana, three major catastrophe risk modeling
companies said on Saturday, far less than was feared as the
storm lost steam before striking land.

One of the firms, AIR Worldwide, said Rita costs will be
much lower than those from Hurricane Katrina, which caused
insured losses that are estimated at anywhere from $14 billion
to $60 billion.

It also appeared, at least initially, to have mostly spared
crucial oil refineries at a time when supplies of gasoline and
other refined products are already stretched.

“The heavy commercial and industrial areas of Port Arthur
and Beaumont – with their numerous refineries – were to the
left of the storm’s track, where wind speeds are lower, so we
do not expect to see significant structural damage to the
refineries,” Jayanta Guin, vice president of research and
modeling at AIR Worldwide, said in a statement.

Texas Senator Kay Bailey Hutchison told reporters in the
state capital Austin that refineries in the Houston area were
also likely to be back up and running fairly quickly, given the
limited damage to the city.

AIR also said the areas worst-hit by Rita had fewer insured
properties in general than those areas ravaged by Katrina,
contributing to the lower loss forecast. There was still heavy
damage, though, in communities like Beaumont, Texas, and Lake
Charles, Louisiana, and the prospect of flooding as Rita
stalled and dumped heavy rains on the region.

Eqecat, another of the major catastrophe modeling
companies, said Saturday Rita caused insured losses from wind
damage in the neighborhood of $3 billion to $6 billion. On
Friday the firm had forecast that Rita could potentially be
responsible for up to $18 billion in losses.

But RMS, which is the other of the major risk modeling
firms along with AIR and Eqecat, said it would not issue a
formal estimate this weekend because there was the potential
for more damage yet to come.

“The primary reason is that the storm is forecast, as it
moves inland, to slow down considerably, and in that process
the rainfall-related flood impacts could be significant,” Kyle
Beatty, a meteorologist for RMS, told Reuters.

Beatty said a fair ballpark estimate for Rita damage from
wind and surge effects, plus physical damage to offshore oil
platforms, was in the range of $5 billion. That figure excludes
any impact from potential new flooding.

120 MPH WINDS

Rita slammed into evacuated towns and oil-rich swamplands
of the Texas-Louisiana border early Saturday, causing
widespread damage and power outages. The powerful storm hit
with 120 mph (193 kph) winds and punishing rains, then weakened
slightly as it moved inland.

It spared Houston, the fourth largest U.S. city, a direct
hit, which had insurers and reinsurers breathing a sigh of
relief Saturday.

“I think for the complex in the Houston area, I would have
to assume it is going to be minor if anything, just because the
storm moved far enough east,” said Bruce Jefferis, managing
director of the natural resources unit at AON, the top global
reinsurance broker.

But the oil city of Beaumont, Texas, and many of the
largest U.S. refiners were in Rita’s path, and the extent of
damage was not yet known, nor was it clear how badly Rita
damaged production in the nearby Gulf of Mexico.

“I’m fairly concerned right now about what’s happened
offshore, because Rita took a worse path for the offshore
assets than Katrina did,” Jefferis said. “The worst part of the
storm would have been on the east side, which would have been
right up the concentration of the assets.”

Texas emergency management officials said they had airborne
assessment teams ready to go out and inspect damages as soon as
winds died down. At least one energy expert feared the worst,
though, given Rita’s track and previous intensity.

“It was right up production alley,” said Harry Quarls,
senior managing director of the global energy practice at Booz
Allen Hamilton. “It was a Category 4 and 5 (storm) when it was
going through.”

(Additional reporting by Texas and Louisiana bureaus)