Storm Edouard Seen As Small Threat

Tropical Storm Edouard, which is headed through the Gulf of Mexico toward Texas, is expected to produce less than $100 million in insured losses, a catastrophe modeling firm said.

The estimate was produced by Oakland, Calif.-based Eqecat Inc. The firm currently estimates there will be no real damage to energy drilling platforms in the Gulf, a spokesman for Eqecat Inc. said.

Aon Re Global offered the same view. In total damages, insured loss potential is low, said a company spokesman. Intensity is expected to range between a weak tropical storm and a Category 1 hurricane with winds up to 95 mph.

Estimates are based on the storm’s current track and forecast. As of early this afternoon, Edouard was currently about 265 miles east-southeast of Galveston, Texas.

The storm was moving at 8 miles per hour, an increase from the previously recorded 6 mph with winds at about 45 mph, according to an Aon Re Cat Alert.

The storm is expected to strengthen to 70 mph and hit the upper Texas coast by morning.

Edouard became the fifth named tropical storm of the 2008 hurricane season late yesterday.

Steve Smith, an atmospheric physicist and president of Property Solutions at ReAdvisory, Carvill Reinsurance Intermediary’s analytical arm, said in a report that impact from Edouard is likely to be limited in scope, and even if the storm were to come ashore near Galveston as a strong Category 1, damage would likely be minimal from a reinsurance perspective.

Mr. Smith noted that with Edouard sitting right in the middle of the Gulf oil field, with expectations it will transit through the oil field almost until landfall, oil prices have shown little reaction.

Varieties of crude oil were trading slightly lower for most of the early morning. “Clearly, energy traders do not see Edouard as a significant threat to oil production at this time,” Mr. Smith said.