Among the P&C insurers covered by CIBC World Markets, Fairfax Financial, Odyssey Re and Northbridge Financial are the P&C insurers most exposed to hurricane Katrina losses, the firm says in a new report.

The companies are expected to provide loss estimates by next week. In the meantime, CIBC WM has cut earnings estimates for all three firms for 2005, but has not changed 2006 estimates.

As well, CIBC WM it is downgrading Fairfax to sector performer from sector outperformer, due to the expected follow-on impact of the storm losses for liquidity levels. It has also lowered its target price for Fairfax to $175 from $195, but left target prices and ratings for Odyssey Re and Northbridge unchanged.

CIBC notes that there is a “large amount of uncertainty related to the ultimate costs of these storms”, but nevertheless it predicts that within the Fairfax Financial group of companies, “there will be a relatively large impact felt from Hurricane Katrina”.

“While the size of the loss will likely still be lower than that incurred from the four hurricanes in 2004, we do expect the losses to have a material negative impact on the earnings we expected in the back half of the year on a consolidated Fairfax basis,” it says. “Perhaps more importantly, the cash flows available to the holding company are expected to be impacted negatively by the hurricane losses.”