The shareholders’ equity of many insurers and reinsurers is coming under greater pressure than anticipated as property/casualty losses from the 2004 hurricane season continue to rise with new estimates, according to a commentary from Standard & Poor’s Ratings Services.

The commentary cites two issues that continue to plague insurers, reinsurers and, ultimately, investors.

First, companies initially underestimated claims because of assumptions they made for construction costs and structural soundness of insured property, and obstacles they faced in gathering accurate information while the storms were still raging.

Second, primary insurers were not adequately reinsured for the frequency of the storm season, which brought four hurricanes to the U.S. East Coast in August and September 2004 instead of just one.

Among the many companies affected are American International Group Inc., Everest Re Group Ltd., IPC Holdings Ltd., RenaissanceRe Holdings Ltd., St. Paul Travelers Cos., XL Capital Ltd., and Zurich. The report cites a steep restatement by RNR, which revised its losses from hurricane-related claims in the third quarter of 2004 upward by 22.4%, to $520 million–equivalent to 21.2% of shareholders’ equity.

Standard & Poor’s says it does not plan any ratings action solely due to revised estimates from the 2004 storm season. The report explains that Standard & Poor’s had already added a property catastrophe exposure-based charge into reinsurers’ capital adequacy and ratings expectations. “Although Standard & Poor’s has not changed ratings or outlooks on these companies as a result, this does highlight a somewhat less conservative approach by these companies,” concludes Damien Magarelli, a credit analyst at Standard & Poor’s.