Some Bermuda reinsurers have been accused of underestimating their likely losses from a major hurricane by a prominent insurance analyst.

MarketWatch reported yesterday that research by Cliff Gallant, an analyst at Keefe, Bruyette & Woods, showed that many reinsurers expected to pay out less in claims from a hurricane that caused $100 billion in insured damage in Florida than they did for Hurricane Katrina, which caused insured losses of $60 billion in the US Gulf Coast and Florida a year ago.

Hurricanes Katrina, Rita and Wilma last year caused roughly $60 billion of insured losses, so Gallant assumed that most reinsurers would forecast larger losses from a $100 billion storm.

"The estimates appear too low," Mr. Gallant wrote in a note to investors yesterday. "Considering how poorly companies performed in 2005, we believe scepticism is warranted."

Many reinsurers were able to underwrite fewer risks at better prices this year, so that could explain some, but not all, of the disparity, Mr. Gallant noted.

Axis Capital and Montpelier Re lost more than $1 billion, before tax, from Katrina, Rita and Wilma, but Mr. Gallant estimates that the companies could lose less than $900 million from a $100 billion storm.

Endurance Speciality lost more than $800 million, before tax, from last year's three big hurricanes. Gallant reckons the reinsurer may lose $609 million from a future $100 billion storm.

The analyst noted similar disparities for Platinum and IPC Holdings. During the first half of 2006, some of these reinsurers had to add to the money they'd set aside to pay claims from last year's hurricanes, suggesting they under-estimated the impact of those storms.

Endurance boosted hurricane reserves by $119 million, or more than 15 percent of its reserves at the end of 2005, Gallant noted.

Everest Re added $163 million, increasing its 2005 storm reserves by more than 22 percent, the analyst added.

"The obvious disappointments are with Everest Re and Endurance," Mr. Gallant wrote. "Errors in properly estimating their reserves should be considered when valuing the shares and assessing current probable maximum loss estimates."