It was good enough for YHOO ...
There is a very reasonable article in today's WSJ that describes the steps that insurers have taken in the wake of Andrew. Specifically, it mentions deductibles, which have moved from small, fixed dollar figures to 5-10% of the loss ... also, it describes the caps with which many policies are equipped.
HMN is incredibly paranoid. I have not asked them about this storm in particular ... perhaps I will walk that path today ... Remember, these guys are very good underwriters of risk and have in place mechanisms that protect the shareholders in the event of a nasty coastal storm ... I am thinking of the equity puts that the company executed with Centre Re in Feb. of 1997 ... these are good until 2002.
To frame this storm: in 1992 (The Year of Andrew), the insurance industry incurred $22.9 billion in losses ... while HMN was hit for $13.3mm.
Freakishly intense Midwest hailstorms cost them more money ... $13.8mm in 1998 ... I would think that their Coastal Region exposure has been greatly mitigated over the last few years ...
Below is an excerpt from the 10K describing HMN's reinsurance:
The Company maintains an excess and catastrophe treaty reinsurance program. The Company reinsures 95% of catastrophe losses above a retention of $7.5 million per occurrence up to $80 million per occurrence in 1998 and 1999. This program is augmented by a $100 million equity put that provides an option to sell shares of the Company's convertible preferred stock with a floating rate dividend at a pre-negotiated price in the event losses from catastrophes, individually or in the aggregate during a calendar year, exceed the catastrophe reinsurance program coverage limit. Before tax benefits, the equity put provides a source of capital for up to $154 million of catastrophe losses above the reinsurance coverage limit. For liability coverages, in both 1998 and 1999, including the educator professional liability policy, the Company reinsures each loss above a retention of $500,000 up to $20 million. The Company also reinsures each property loss above a retention of $500,000 up to $2.5 million in 1999 compared to $500,000 up to $1.5 million for 1998.
Pretty paranoid (a good thing in the eyes of the shareholders and rating agencies) ...
PLEASE FEEL FREE TO SELL ME MORE STOCK BELOW $30 ...
--Duker
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