The impact of Hurricane Ike on the re/insurance industry is expected to be "manageable" due to the capital strength of the sector.

That is the view of AM Best Co., which has begun to assess the potential financial effect Ike might have on the property and casualty industry.

And Risk Management Solutions (RMS) yesterday said it had refined its estimate for US onshore and offshore insured losses from Hurricane Ike to $7 to $12 billion from its original estimate of $6 to $16 billion.

The estimate included onshore and offshore losses resulting from strong winds and storm surge but did not include losses covered under flood policies issued by the National Flood Insurance Programme, or loss of oil and gas production due to pipeline supply interruptions.

Best said reinsurers will suffer big losses as a result of Ike's size and the overall level of insured exposure in the region.

"Although Hurricane Ike is a sizeable catastrophic event, the overall financial impact to both the primary and reinsurance sectors is expected to be generally manageable given the current overall capital strength of the industry," said Best.

"As with Hurricane Gustav, it is anticipated that Hurricane Ike will not be a solvency event from an industry-wide perspective.

"However, AM Best expects that Hurricane Ike as well as the active hurricane season will bring additional earnings pressure to the market.

"As events of greater severity typically impact reinsurers, it is anticipated that the competitive reinsurance segment will also incur greater losses as a result of Hurricane Ike's size and the overall level of insured exposure in the region."

Given the magnitude of Hurricane Ike, the inevitable comparisons to Hurricane Katrina have already been put forward, the ratings agency said.

It said that, as was the case with Katrina, significant storm surge has been associated with Ike and although policy-language issues regarding "wind vs. water" damage have been largely resolved since 2005.

"... As catastrophic events already have been factored into the analysis, AM Best does not anticipate a significant number of rating actions to be associated with Hurricane Ike."