Bermuda-based Renaissance Re will likely post a loss in the third quarter because due to hurricane damage, said financial analysts.

Analysts continued to rate the company as a favourable investment yesterday, but predicted the likelihood of third quarter losses in investment notes published following the company saying yesterday morning that hurricanes Charley, Frances, Ivan and Jeanne were expected to "negatively impact" quarterly earnings by $425 million.

RenRe said its $425 million estimate was based on results from "catastrophe simulation models and on limited initial loss reports". The company said it did not expect any "material losses" from other events that have occurred this quarter, including the Japanese typhoons.

Broken down per event, RenRe said current projections were that each of the four hurricanes would negatively impact the company by about $100 million.

The estimates of exposure are significantly higher than what has been posted by most of RenRe's peers, but the company said this was the result of its decision to pursue a "relatively large share of the Florida market, as well as from the structure of the company's ceded reinsurance which generally responds to higher industry losses".

RenRe CEO, James Stanard, said following the company's second quarter earnings release in July that the company expected earnings per share (EPS) guidance to be in a range of $6.95 to $7.25 compared with predictions of $6.10 to $6.50 previously.

The numbers were bumped up in July because of "low losses in the first half of the year" and were said to "assume normal loss activity in the second half of the year". Yesterday the company said it would not be revising its earnings guidance at this time.

But analysts did predict where RenRe's earnings would fall.

Goldman Sachs analysts Thomas Cholnoky and Matthew Heimermann predicted the company would post a loss per share of $3.55, and revised its 2004 EPS estimates down from $3.39 to $2.13.

Mr. Cholnoky and Mr. Heimermann said in their investment note: "While the absolute loss estimate may appear high, we note that the company had made a conscious decision to write business in the state given the favourable rate environment. While we do not expect these losses to have a material effect on the company's capital adequacy or ratings, we do believe that the size of the loss will prove to be a positive for property catastrophe pricing on a go-forward basis. We continue to rate RenRe's shares in-line; our coverage view is 'attractive'."

Merrill Lynch analyst Jay Cohen said that the company had revised its RenRe earnings estimate for the year down from $6.25 per share to $2.35 per share because of losses from hurricanes.

Both Merrill Lynch and Goldman Sachs revised RenRe estimates in recent weeks, after the company reported on the expected impact from Hurricane Charley.