Hurricane Andrew.

The companies most likely to suffer the heaviest losses are Paumanock Insurance, Stockholm Re., Brittany Insurance and NRG Victory, according to industry officials.

But Bermuda's captive firms will also suffer indirectly if their parent companies do business in Louisiana and Florida, the areas most affected by the hurricane.

One of the most exposed reinsurance firms is thought to be Paumanock, which is part of the Rollins Burdick Hunter group of companies.

Paumanock's boss Mr. Robin Spencer-Arscott has been too busy over the last few days to talk about possible losses.

But companies in Bermuda will almost certainly be hit for claims running into millions of dollars.

Some industry officials in the US believe the total amount of insured damage could match or exceed the $4.2 billion in claims arising from Hurricane Hugo, which hit North Carolina in 1989.

Mr. Chris Fullerton, vice president of Brittany Insurance in Bermuda, said yesterday it was too early to guess accurately what the total insured damage will be.

"My worst expectation is that our company will suffer a loss of about $2 million,'' he said.

That was the same amount Brittany lost due to Hurricane Hugo. Although Andrew's damage is expected to be worse than Hugo's, Brittany is currently writing less reinsurance business than it was then.

"The biggest number for total losses that I've heard is $20 billion but you don't know how much of that is an insured loss,'' said Mr. Fullerton.

"There's a big difference.'' Mr. Fullerton said Florida and Louisiana were areas that were well-known as being particularly susceptible to hurricanes and, as such, prudent underwriters had treated them with caution.

"Underwriters, to some degree, try to avoid the area or reduce their exposures,'' he said. He added that there were several poor parts of Florida and Louisiana which may mean that an unusually large amount of the damage could be uninsured.

"Also there's a recession on,'' he said. "If people are struggling for money they tend to take out less insurance, preferring to spend it instead on items considered to be more essential.'' Mrs. Gail Martin, deputy underwriter with NRG Victory management company, said Bermuda's reinsurance industry would be hit hard by Andrew.

"There's certainly going to be a major loss for Bermuda,'' she said. "This is going to be another Hugo. Everyone will see it in their books.'' But she was optimistic about her own firm's exposure to the area. "We've tried to stay away from Florida and the Gulf coasts and reduce our exposure over the last few years,'' she said.

"We're expecting a loss but not as big as most in the market might see. From what I understand in London there's people running around everywhere.'' In the US, insurance companies are already being swamped by claims as the damage toll rises in Florida and Louisiana.

Official estimates on the number of claims filed are not expected until next week but the insured bill is expected to exceed $4 billion.

Connecticut-based insurance companies said their adjusters arrived in Florida on Tuesday to begin assessing the damage but were hampered by power and telephone outages and airport closings.

They also mobilised to begin handling claims from hurricane damage in Louisiana, which was being pummelled by the storm yesterday.

Aetna Life & Casualty Co., which has offices in Bermuda, said it had received about 500 claims on Monday and a much heavier deluge of calls on Tuesday, though no numbers were available.

Travelers Corp.'s had received about 1,500 claims by late Tuesday. The company had nearly 11,000 claims from Hugo, costing the firm $45 million after taxes.

ITT Hartford Insurance Group said it expected to field more than 2,000 claims by Tuesday night.

Emergency management officials in Florida have given preliminary damage estimates from the storm of $15 billion to $20 billion, but those figures would include damage not covered by insurance.

Hugo, which hit in 1989, was the insurance industry's costliest hurricane, but total claims ended up being about half the total damage estimates of nearly $8 billion.

Analysts note, however, that with $160 billion in surplus capital, the insurance industry is well prepared to cope with the flood of claims from Andrew.