Bermuda-based insurers are bracing themselves for another wave of claims and losses as Hurricane Frances takes aim at the Florida coast, but there is speculation that ultimately they may benefit.

Market analysts said this week that while damage from the Category 4 storm could leave property and casualty insurance companies exposed to losses and short-term decreases in their stock prices, subsequently they may well increase rates for property coverage in order to offset those losses.

Deutsche Bank stated that ?given the imminence of the storm and the recent memory of Hurricane Charley, investors may delay purchasing P&C stocks even if they find the valuations to be attractive.?

And while analysts at Prudential Equity Group expressed similar concerns, both firms felt that insurance companies would withstand and even benefit in the aftermath of Frances.

?We believe investors should be cautious on the P&C stocks ahead of Frances making landfall, which is expected to occur this weekend,? a spokesman from Prudential said. ?Once the storm passes, we believe the stocks could rally, because the insurers are in a better position to raise prices going forward.?

After experiencing declines mid-week, stocks for all three Bermuda companies and other locally-based insurers who may be impacted by Hurricane Frances rebounded in late trading yesterday on the New York Stock Exchange.

The rally was led by Renaissance Re which increased by $3.43 to $52.55; XL Capital rose $2.71 to $72.14, Partner Re stocks went up by $2.05 to reach $53.71, AIG rose $1.69 to $71.90 Arch Capital increased by $1.33 to $38.45 and ACE rose by almost a dollar to reach $38.45.

Prudential also cited three Bermuda-based insurers, ACE Limited, American International Group (AIG)and Renaissance Re, as having ?more modest? exposure to the storm, along with US players St. Paul Travelers and Hartford Financial Services Group among others.

Insurers are monitoring the path of the hurricane closely and waiting to see what impact it will have on the market coming so closely on the heels of Hurricane Charley, which hit Florida and the Carolinas just last month. Charley caused an estimated $7 billion in insured damages, and analysts at investment bank UBS AG warned this week that Frances could ?exceed the insured losses of Hurricane Andrew.? In 1992 Andrew cost the insurance industry the equivalent of $20 billion in today?s dollars.

However, an assessment from insurance analysts from Lehman Brothers earlier this week was optimistic, if pragmatic, in terms of the industry?s resilience in the face of another potentially devastating storm this time around: ?It is not good news for the industry, but the industry is better able to withstand it than 12 years ago. If it (cumulative losses from Charley and Frances) piles up, there may be some insolvencies among smaller companies.?

The company added that a surplus run by the insurance industry, usually money invested in securities like bonds from which they pay claims, is nearly 2- times larger this year, at about $396 billion, than when Andrew struck.

Regarding the Bermuda market, one locally-based industry insider said yesterday that Hurricane Frances may be a serious test for a number of Bermuda companies as well as the US insurers that they reinsure, and its impact on the market here could be as dramatic as Hurricane Andrew and September 11.

He said that the storm could result in either another influx of new capital or new companies, depending on the eventual magnitude of the losses involved. He added that there may even be no net change in the overall number of companies in the local market if any that wind up in the wake of losses arising from Frances are simply replaced by new insurers.

While conceding that there is obviously uncertainty in terms of assessing the outcome of Frances at this point, he said that there is currently significant concern within the industry about the likely impact of the storm.