By Ben Berkowitz
BOSTON (Reuters) - Damaging hailstorms in Australia. Unprecedented tornadoes in the southeastern United States. Constant windstorms in northern Europe. Sound familiar?
This year is starting a lot like last year in terms of unexpectedly severe weather, to the consternation of the insurance industry, which paid out more than $100 billion in 2011 on natural disasters.
That could put more pressure on the shares of property and casualty insurers, who did relatively better than other insurers last year but who have turned in a mixed performance so far in 2012, despite being a favorite of some analysts.
To be fair, more than half of the 2011 losses came from earthquakes in Japan and New Zealand, and earthquakes are impossible to precisely predict. Even so, some of the worst events of 2011 (like the U.S. tornadoes in April and May) took many by surprise, and there is yet to be much relief.
"There's no sign that anything's necessarily changed from a (catastrophe) perspective," said JMP Securities analyst Matthew Carletti in an interview. "Catastrophes don't follow a calendar year."
The problem with a potentially rough start to the year is that most insurers expected 2012 to be better than 2011, which was either the worst or second-worst year in industry history, depending on the ultimate losses from flooding in Thailand.
The Insurance Information Institute surveyed executives at its annual industry forum this week and found that 75 percent expect their profits to rise.
Nearly 80 percent said they expect their combined ratio -- how much they pay out in expenses and claims versus how much they take in from premiums -- to improve after topping 108 in 2011. (The figure means they paid out $1.08 in claims and expenses for every $1 in premiums they collected).
CAUSES FOR OPTIMISM
Any change to the contrary could add up for insurers like Travelers Cos Inc
That will disappoint some who thought the property insurers could stand out this year. Janney Capital Markets unit Langen McAlenney, in its 2012 preview, said it would allocate 40 percent of a theoretical sector investment to property insurers, against 15 percent a year ago and 25 percent eight months ago.
But JMP's Carletti argued there are still plenty of reasons for optimism, particularly as insurers like Travelers and Chubb report prices are finally improving after years of weakness.
"I think it depends who you are. If you are an insurer or reinsurer with excess capital and the ability to take advantage of an improving rate environment, things are getting better; things are looking up," he said.
"If you are an insurer that had a lot of catastrophe losses that doesn't have a lot of excess capital, you're really only getting one side of the equation."
Travelers and Chubb are among those often cited as the best capitalized and best placed to take advantage of improvements in the industry.
The first signs 2012 could be a copycat of 2011 came from Australia, where Victoria state was ravaged by a severe hailstorm in late December.
The country's top home and auto insurer, Insurance Australia Group
Meanwhile, Europe is being buffeted by windstorms that are more frequent than expected. RMS, one of the three firms the insurance industry relies on to model the effects of natural disasters, said earlier this month there was evidence of "clustering" in the storms that hit the continent this season.
"The 2011/2012 windstorm season is shaping up to be fairly active compared to the past 10 or so years in northern Europe," RMS director of catastrophe response Neena Saith said in an early January report.
While the storms have been moderate, Saith said, they have nonetheless been in areas of high insured risk.
The United States is not immune, either. After a start to winter that was by most accounts incredibly mild, the weather has started to turn this week. Western North Carolina, where tornadoes are unprecedented at this time of year, was hit by at least one and perhaps more on Wednesday.
Friday could also bring severe wind gusts to major metropolitan areas in the eastern United States, AccuWeather said on Thursday.
All of that bad weather adds up, one industry veteran said, though insurers sometimes miss the ultimate point in the race to raise rates.
"The history of the insurance industry is, premiums chase losses," said Chris Johnson, a senior vice president at engineering-focused insurer FM Global.
"What we've seen last year was clearly an unprecedented number of natural catastrophes, but there's nothing to say that pattern will or will not repeat (this) year," he said. "What I wish we could do is really focus on how do we mitigate and avoid the loss in the first place."
(Reporting By Ben Berkowitz; Editing by Alwyn Scott; Editing by Gerald E. McCormick)