Bermuda-based reinsurers may end up breathing a sigh of relief this week as estimates of insured losses from Hurricane Frances have been revised downwards from originally quoted figures which topped $35 billion.

Federal and state authorities said yesterday that it was too early to offer a detailed damage report from the storm, which crashed into central and southern Florida last Friday and pummelled the state in its second landfall there on Monday. However in a Press release yesterday, Air Worldwide, an insurance industry research firm, said that insured losses could reach a still substantial but more moderate $10 billion.

"While significantly less intense than Hurricane Charley in terms of sustained wind speeds at landfall, AIR Worldwide estimates that total insured losses for Florida from Frances will fall within a very similar range: between $5 and $10 billion."

The company added that the losses could reach this level because, although weaker than Hurricane Charley, Frances was twice as large as its predecessor and would probably generate more claims. Hurricane Charley caused $7.4 billion in damage and left 27 people dead in Florida three weeks ago. Frances was a Category 2 storm when it made landfall on the Florida coast last Friday, and was eventually downgraded to a tropical storm two days ago.

Munich Re, the world's largest reinsurer, said on Monday that the total damage from Frances in the Caribbean and the United States could run from $5 billion to $15 billion. Other estimates put the damage specifically in Florida in the $3 billion to $8 billion range. Original estimates from catastrophe modelling firm Risk Management Solutions had put potential losses in the range of $10 billion to $35 billion.

If the $10 billion estimated losses are realised Frances will be the second most expensive hurricane in US history, behind Hurricane Andrew, the 1992 Category 4 storm that caused $20 billion in insured damage, adjusted for inflation, and devastated the property insurance industry in Florida.

Even with the impact of back-to-back storms of the magnitude of Charley and Frances, for the moment there does not appear to be significant concern within the industry here and in the US about smaller insurers experiencing difficulties or even going bankrupt.

In addition to private reinsurance placed with entities such as Bermuda's ACE and XL Capital, US insurers will buffer their post-Frances losses to some degree with assistance from the Florida Hurricane Catastrophe Fund, which was created by state and industry officials after Andrew to keep insurers writing policies in Florida.

As well as creating the fund, which is essentially reinsurance for the companies, the officials raised rates substantially to build reserves, and let the insurers charge larger deductibles to reduce the industry's risk. The back-up fund will reportedly still have $5 billion in cash after paying out about $1 billion for Charley to date to insurers. If that amount is still not enough, the fund can issue bonds for up to $9 billion more.

If it does, Floridians will see assessments, or surcharges, on their policies to cover the cost. Bermuda-based re/insurers are expected to release estimates of likely claims or losses for their companies resulting from Frances, and the possible impact on their earnings per share, in the next few days.

Meanwhile, in what is turning out to be one of the most active hurricane seasons on record, all eyes are on Hurricane Ivan, a Category 3 storm currently gathering strength and bearing down on the Windward Islands in the Eastern Caribbean with maximum sustained winds of around 115 miles per hour.