After Hurricane Ivan (search) pummeled a wide swath of land along the Gulf of Mexico Thursday, some U.S. insurers swamped by the third major hurricane of 2004 might find their profits gone with the wind.

Analysts at Fitch Ratings agency (search) say Ivan could be the second-costliest hurricane in U.S. history.

Ivan, the latest major hurricane to strike the U.S. mainland this year after Hurricanes Charley and Frances, made landfall overnight, with the eye passing over Alabama and the Florida Panhandle sustaining significant damage. Its impact was also felt heavily ites suggest the storm could create insured losses of between $4 billion and $10 billion, according to Eqecat.

"It may lead some companies to have losses this quarter," said Alain Karaoglan, equity research analyst at Deutsche Bank Securities Inc. who specializes in the insurance industry. "It is not just Ivan. It is the many hurricanes in the quarter."

"The industry was having a very good year. These losses will reduce profitability in some areas. (But) I don't think the whole industry will lose money," said Rod Fox, chief executive at Benfield, the world's largest independent reinsurance broker.

While it is early to tally up insured losses in the wake of Ivan, Fitch warned that Ivan may supplant Charley — which generated about $6.8 billion in insured losses — as the second costliest hurricane in U.S. history after 1992's Hurricane Andrew (search).

If losses from Ivan did approach the $10 billion range, with six weeks still left in hurricane season, then total 2004 catastrophe losses could hit $25 billion. "This represents more than twice the average annual U.S. catastrophe losses of $11 billion," warned Fitch.

Industry observers say insurers with the greatest exposure to areas hit by Hurricane Ivan include State Farm Mutual Group; Allstate Corp.'s (ALL) Allstate Insurance Co. affiliate; Alfa Insurance Group, of which publicly traded Alfa Corp. (ALFA) is a member; Farmers Insurance Group (search); Mississippi Farm Bureau Mutual (search); and Louisiana Farm Bureau Mutual (search).

"Those six have significant market share in the affected areas and that translates into more exposure to losses," said John Andre, vice president at A.M. Best, an insurance rating agency.

In addition to damaging property, displacing home owners and disrupt businesses, this year's hurricanes are sure to increase the cost of insuring properties and businesses in states with heavy exposure to catastrophic storms.

That is, in part, because insurers in those areas themselves may experience higher costs related to reinsurance.

Reinsurance is insurance insurers seek out for themselves to avoid having to pay large amounts for catastrophic losses.

"An insurance company will lay off risk with reinsurance. Reinsurance costs rise first and, then, this is passed on to consumers and businesses," said Deutsche Bank's Karaoglan.

According to Fitch, primary insurers bear the brunt of costs of 2004's hurricanes, even though Ivan does shift some of the burden to reinsurers. With each successive storm, primary insurers must first absorb the full cost up to a deductible before they can pass on losses to reinsurers.

"The inclination to cut prices will be diminished somewhat. There will be modest cost increases in the reinsurance side" for companies with exposure to areas hit by the trio of hurricanes, said Stefan Holzberger, managing analyst at A.M. Best.

"Meaningful insured losses from Ivan are expected to occur outside of Florida. As a result, private reinsurers will also absorb the reinsurance losses as opposed to the Florida Hurricane Catastrophe Fund, a public-sponsored reinsurer that provides a significant amount of reinsurance in Florida," warned Fitch.