An Example of Early Quantitative Fundamental Industry Analysis - A Note on Forecasting Insured Losses Due to Catastrophes

Fundamental stock analysts covering the insurance industry may be overly influenced by infrequent large scale catastrophes, such as unusually strong hurricanes. It is important for these analysts to be able to put catastrophes in financial perspective in order to set an appropriate fair value on an insurance company's stock. This paper presents an analysis of insurance industry losses due to catastrophes and shows how they can be put in perspective with respect to frequency and size.