RMS Estimates Up To $1.5 Bn Insured Loss From Hurricane Dean

Newark, Calif. – August 21, 2007 – Insured losses from Hurricane Dean, which today made landfall in the Yucatan Peninsula of Mexico, are likely to range between just US$ 0.75 billion and $1.5 billion, according to latest estimates by Risk Management Solutions, the world’s leading provider of products and services for catastrophe risk management. Of this, only up to $300 million is expected to be from damage to the Mexican coast, with most of the remainder resulting from the storm’s destruction in Jamaica.

Hurricane Dean -the first category 5 storm since 2005, with wind speeds of around 160 miles per hour - struck the south-eastern Yucatan Peninsular coast in a sparsely populated area approximately 40 miles north east of Chetumal. Had the storm tracked 150 miles north it would have impacted the bustling tourist cities of Cancun and Cozumel, tripling the insured loss in Mexico.

“Dean has taken an extraordinarily fortunate track, slipping between St Lucia and Martinique and striking a scarcely populated area of the Mexican coast. Given its intensity, the Caribbean and Winward Islands have faired relatively well,” commented Dr Claire Souch, senior director of model management at RMS. “Though Jamaica has taken a large hit, the track for a category 5 storm could hardly have been better planned to minimize the damage.”

She added: “Dean’s impact in Mexico will be similar to Hurricane Emily’s in 2005, which was a category 4 storm and caused around $250 million of insured loss. If Dean had made landfall in the north of the Yucatan Peninsular coast, we could have been looking at a near repeat of Hurricane Wilma, which devastated the area and resulted in insured losses of some $1.8 billion.”

Dean has remained a fairly small storm since it originated from a vigorous tropical wave that moved off Africa’s west coast on 11 August, though it has intensified relatively quickly. As it travels across the Yucatan Peninsula it will decrease in intensity, but will likely maintain a category 1 to 2 hurricane status before emerging into the Bay of Campeche. Here, it is not expected to cause much damage, despite being where the majority of Mexico’s oil is extracted.

Forecasts suggest that it will not make landfall in the United States and will instead continue on a westward route and make a final landfall in a lowly populated region of Mexico on Wednesday night. Interaction with land should cause the hurricane to decay rapidly to a tropical storm.

RMS will continue to monitor the situation and will update its estimate of insured losses as its analysis continues.