Bermuda-based insurance giant XL Capital yesterday announced it expected to be hit with net claims of about $125 million as a result of devastating storm Hurricane Charley.

The category four hurricane hit Florida last Friday, and is estimated to be the second costliest storm to ever hit the US, said the New York-based Insurance Information Institute.

The III predicted insurers were likely to pay out an estimated $7.4 billion for damages from the storm.

The storm, which swept across Florida and into the Carolinas, was said to rank as the second most costly trailing behind the cost of devastation from Hurricane Andrew, which caused $15.5 billion in insured losses in 1992 , according to III chief economist Dr. Robert Hartwig.

Several other Bermuda-based firms, Partner Re, Renaissance Re and IPC Re ? all of which were set up on the Island after a void in property-catastrophe resulting from Hurricane Andrew ? said earlier in the week that they would soon issue estimates of their exposure to Charley.

ACE Limited is also understood to be assessing the situation, with analyst estimates of claims in the millions.

Speaking to how Charley will have impacted the sector as a whole, Dr. Hartwig pointed out that the largest insurer of hurricane damage in Florida is not a private insurance company, but Citizens Property Insurance Corporation, a state-established program which provides insurance to consumers who cannot find coverage in the private market.

He said that hurricane deductibles in coastal Florida generally range from two to five percent of the insured value of the property, rather than a dollar deductible.

Percentage deductibles are common in hurricane-prone areas along the Gulf and Atlantic coasts. Percentage deductibles reportedly allow insurance companies to make homeowners insurance more affordable and widely available.

?While formidable, Charley falls generally within the range of catastrophic risk that insurers anticipated and built into insurance premiums for homeowners and businesses in hurricane prone areas,? he said. ?I would not expect the storm by itself to have a significant effect on the availability or cost of insurance in Florida.?

Beyond the wind damage to homes, commercial properties and automobiles, the widespread mandatory evacuations in storm-damaged areas of the state will trigger some business interruption coverage as well.

In a Press release, XL said it expected the majority of its claims from the hurricane would be received by its Bermuda-based reinsurance unit.

Although it said the claims would impact its third quarter results, it will not materially affect XL?s overall financial condition.

Separately, XL said it plans to sell up to $300 million of senior notes due 2014, pursuant to a currently effective shelf registration statement.