Just last week, Berkshire Hathaway's (NYSE: BRK.A) rosy 1st quarter earnings report made note of how the relatively tranquil weather of 2006 helped its re-insurance business generate handsome profits. Looking around the country today, with L.A. and Georgia threatened by fire, the Midwest flooded and one of the earliest tropical storms in history battering Florida, I wonder what this bodes for such companies in 2007?

In 2006, the ISO's Property Claims Services estimates, U.S. firms paid out $9.2 billion for catastrophic losses, in comparison to $61.2 billion in 2005. These figures make it starkly clear how difficult it is to forecast financial performance for the re-insurance market that absorbs this risk.

Unfortunately, forecasters generally expect a more active storm season this year, as the El Niño that is credited with softening 2006 weather has dissipated.

Totals from the 1st quarter of 2007 were only $1.22 billion, mostly as a result of storms that generated tornadoes. However, historically almost half of all catastrophic loss claims are caused by tropical storms and hurricanes, and that season is just beginning. The second most common loss engine is the tornado, and we're still in the midst of an active season.