United Fire still feeling Katrina impact

Four years after Hurricane Katrina slammed into the Gulf Coast in August 2005, United Fire & Casualty Co. is still feeling the financial impact of the storm.

The Cedar Rapids insurer on Monday reported a net loss of $10.2 million, or 38 cents per share. for the third quarter of 2009, compared with a net loss of $16.8 million, or 63 cents per share, for the same period a year ago.

Pretax catastrophe losses, excluding loss development on Hurricane Katrina claims litigation, totaled $9.5 million in the third quarter of 2009, compared with $36.7 million in the third quarter of 2008.

Over 95 percent of United Fire's policyholders through its Lafayette Insurance Co. subsidiary in the New Orleans area suffered damage from Hurricane Katrina, with over 11,000 claims reported.

United Fire's total loss and loss settlement expenses to date (after reinsurance) in relation to Hurricane Katrina are $289.2 million. Through the first nine months of 2009, the company's loss and loss settlement expenses related to Hurricane Katrina were $38.3 million.

United Fire said $19.0 million of that $38.3 million loss is due to an increase in reserves for Hurricane Katrina claims lawsuits. The insurer said the primary reason for the higher reserves is the continuing unfavorable legal environment related to Hurricane Katrina in Louisiana.

United Fire President Randy Ramlo said the company is winding down the operation of Lafayette Insurance, which is based in New Orleans.

“Because Lafayette Insurance Co. is domiciled in Louisiana, we are subject to the jurisdiction of the state court system, with limited access to the federal court system,” Ramlo said. “On Jan. 1, we will cease writing business through Lafayette in the state of Louisiana.

“We will continue to provide personal and commercial insurance in Louisiana under United Fire & Casualty Co. and our subsidiary, United Fire & Indemnity Co. By no longer doing business under Lafayette in Louisiana, we will have access to the federal court system if we so choose.”