The United States has experienced an active hurricane year, as predicted. As of today, near the peak of hurricane season, the Atlantic basin has hosted 12 named storms and two hurricanes, both of which were major hurricanes (Category 3 or greater). The 2011 season has already exceeded the historical average of activity (9.6 storms) and is approaching the seasonal forecasts for the year.

The first hurricane of the season, Irene, achieved major hurricane status on August 24 but weakened to a Category 1 storm prior to landfall on North Carolina’s Outer Banks. Irene will be remembered more for its rain than wind, as it contributed to major flooding following its second and third landfalls as a borderline Category 1 near Atlantic City, New Jersey and as a tropical storm at Coney Island, New York. Strong winds and heavy rains continued up the Hudson Valley and into much of New England. Irene resulted in 46 deaths in the U.S. with over 50 million persons exposed to tropical storm or greater winds (+39mph), damaging rainfall and/or flooding. Seven and a half million electricity customers lost service. Irene was a surprisingly large and complex storm relative to its wind speed at landfall. As a result, we believe it will be more challenging to model than some other events.

Catastrophe models do not include insured losses due to inland flooding, Crop, Life and LAE. Models only implicitly consider damage by fallen limbs, which may be a greater than usual contribution in this weak, but wide storm. Inland flooding is severe. Much of the loss will fall to the Federal Flood program, but there are insured losses under APD, farm and contractors’ equipment coverage, MPCI, sewer back-up and excess coverages. Time Element claims due to wind damage will be complicated by evacuation orders, flood and power interruption delays, and the amounts exposed for a summer weekend in coastal resorts are significant. Irene also caused significant loss in the Caribbean and Bahamas.

Though it didn’t make landfall as a hurricane, slow-moving Tropical Storm Lee generated large amounts of rainfall and some damaging floods throughout Louisiana, Mississippi and Alabama – and continues to soak the Appalachian states. Lee’s remnants also stoked wildfires to its west, which have now destroyed nearly 500 homes in Central Texas. Lee caused some shut downs, but only moderate damage in the Gulf oil fields. Four deaths have been directly attributed to Lee in Mississippi and Alabama.

Currently, Hurricane Katia is a Category 3 storm located approximately 375 miles south of Bermuda. The National Hurricane Center has indicated that it poses no current threat to land. Katia is forecast to pass between the U.S. East Coast and Bermuda over the course of this week.

Looking forward, water temperatures in the Mid-Atlantic were cooled over the last week by the waves of Irene. In other coastal areas, temperatures did not significantly change and are near seasonal levels.

Best Regards,

Paul Kneuer / Kathy Sandberg / Gloria LaGrua / Jon Christianson / Heather Talarico / Duane Hynes