REPUBLIC SAYS LOSSES FROM HURRICANES WITHIN EXPECTATIONS

Dallas-based Republic Companies Group Inc. reported that the effect on its financials of both Hurricane Katrina and Hurricane Rita should be within the loss expected from a major wind-related catastrophe covered by the company’s reinsurance treaties. During the third quarter, Republic purchased additional reinsurance coverage to protect against additional catastrophe weather events in 2005.

The after tax impact on Republic’s third quarter net income of Hurricane Rita (net of recoveries from catastrophe reinsurance treaties) and the cost of additional reinsurance coverage is estimated at $1.3 million. The remainder of the cost of the additional reinsurance coverage will be reflected in the company’s fourth quarter results.

Taking into account the previously reported impact of Hurricane Katrina, the total, after tax impact on its third quarter financials of the two hurricanes (net of reinsurance recoveries) and the related purchase of additional reinsurance, is approximately $4.6 million.

Republic Group companies provide insurance for windstorm damage and related risks to homes, automobiles and commercial businesses in Texas and Louisiana. Consistent with industry practice, Republic’s policy terms do not include losses related to flood damage, the company said. The losses related to Hurricane Rita are still being assessed. But Republic expects the gross loss to be within the limits of its excess of loss reinsurance coverage.

For the full year 2005, Republic has decreased its return on average equity guidance from a range of 13 percent-15 percent to a range of 12 percent-14 percent.