Bermuda companies can be expected to shoulder in excess of $2.5 billion in insurance claims arising from Hurricane Katrina, based on preliminary estimates issued by nine of the Island?s insurance and reinsurance companies.

On the whole, the insurance sector is steeling itself for the largest claims from any single catastrophe ever, with expert estimates on the final cost of Katrina ranging from $30 billion up to $60 billion. The highest estimate, $40 billion to $60 billion, was put out by risk modelling firm Risk Management Solutions and includes between $15 billion and $25 billion in flood claims. Insurers are bracing for an influx of property catastrophe claims, business interruption claims and workers? compensation claims from the Category 4 storm that hit Gulf Coast areas on August 29. Insurers could also be left holding the bag for the cost of flooding damage in New Orleans, after the city?s levee system broke in the storm. Flood damage is excluded from most home and commercial policies.

The Island?s reinsurers are also expected to take a big hit as insurers call in reinsurance policies to help them meet Katrina claims. Reinsurers contract to take on some of the risk of losses on policies that insurers sell to individuals and companies. Retrocessional, or retro, reinsurers also sell policies but ones that allow their fellow reinsurers to spread the risk in the policies they have sold to insurers. XL Capital chief executive Brian O?Hara, in an after-market company statement last night, said: ?We believe that Hurricane Katrina could become the most costly natural catastrophe for our industry to date.?

ACE chief executive Evan Greenberg echoed his rival?s words saying claims from Katrina and the so-called Great New Orleans Flood ?have produced losses on an unprecedented scale?.

XL said it expects to pay out up to 1.75 percent of the total Katrina-related loss. If the total insured loss was $30 billion, that would result in a payout of $575 million. In addition, the giant insurance and reinsurance company said it could see claims for a further $80 million, pre-tax, related to other third quarter catastrophes including the European floods.

Mr. O?Hara said XL, despite the hit, was ?well-positioned to participate in the upcoming renewal season?.

There is now a widely-held expectation that insurance sales could escalate following the disaster, especially those of property-catastrophe policies, which may also command a better price. Most insurance policies are renewed in January, but policies bought to protect against hurricane damage are usually sold just before the start of storm season, with the possibility of hurricanes forming in the Atlantic from June through November. While ACE said damage continues to be difficult to assess because of the large area hit by Katrina, as well as the flooding, its preliminary estimate were losses in the $450 million to $550 million range. The company made its announcement after market close. While the final bill for Bermudian insurers and reinsurers continues to mount, the loss estimates from ACE, XL and seven other companies tops $2.5 billion, when taken conservatively at the low end of ranges.

However, the final tally is likely to grow with a handful of companies actively selling property-catastrophe policies yet to put out estimates for Katrina-related claims.

One ?retro? reinsurer who has said it expects to have to pink up after Katrina is PXRE. In a bulletin late on Sunday, the Bermuda company said its preliminary estimate of loss from Katrina stood around $253 million.

About 30 percent of the policies PX Re sold in 2005 were retrocessional, according to data given by company management during a recent investor forum.

The size of PXRe?s Katrina charge is likely to leave the company posting a 2005 net loss of between $85 million and $100 million, it said.

Another Bermudian reinsurAnother Bermudian reinsurer, Montpelier Re Holdings Ltd., yesterday said its preliminary estimate of losses from the storm and flooding that followed was expected to be between $475 million and $675 million. The estimate was based on the total industry bill coming in between $30 billion and $40 billion, including energy claims from damage to oil rigs and refineries in the Gulf of Mexico.

The company took a pounding from investors after the news. Its shares lost 17.28 percent, closing down at a 52-week low of $25.99 in trading yesterday on the New York Stock Exchange.

And RenaissanceRe on Friday said it expected losses from Katrina to be equal to about one percent of the event?s total claims. The company, which sustained steep losses in the third quarter last year from the 2004 storms, said the size of its Katrina claims meant it would not meet previous earnings estimates but was still expected to turn a profit for the year. Shares of RenaissanceRe were up yesterday $1.52 to $44.17. White Mountains Insurance Group, Ltd., a Bermuda insurance and reinsurance group, said on Friday that its estimate of total net loss from Katrina will be in a range of $150 to $300 million pretax, or $100 to $200 million after tax. Its shares were down $23.75 at $635.25.

Last Thursday, PartnerRe Ltd. said it expected its third-quarter losses to shave up to ten percent, or $348 million, off shareholders? equity of $3.48 billion. Partner?s share price rebounded to $62.25 yesterday, after falling into the mid-$50 range last week. Rosemont, a Bermuda reinsurer owned by UK-based Goshawk Insurance Holdings Plc., said it expected the unit?s Katrina claims to be $25 million- $30 million. And Aspen Insurance Holdings expects an after-tax loss in the region of $150 million. Aspen shares inched up $1 to $28.91. In the financial guaranty arena, Assured Guaranty Ltd., which sells the specialist insurance and reinsurance to bond issuers, put its public finance exposure related to Hurricane Katrina at $155 million.