All we can do is wait for Alex.

Hurricane season start June 1, 2010, with Alex chosen as the first name, and it's expected to be above average. The Colorado State University forecast released on Wednesday predicts 15 named storms in the Atlantic basin, due partly to record warm water. Eight of them are expected to reach hurricane status, with sustained winds of 74 mph, and four are forecasted to become Category 3, 4 or 5 storms, with sustained winds of 111 mph. Typically, there are only 10 named storms, with six becoming hurricanes (two of them major), based on data going back to 1950.

William Gray, a member of the CSU Tropical Meteorology Project, told USA Today, "The probability of a major hurricane making landfall along the U.S. coastline is 69%, compared with the last-century average of 52%."

When I started my brief stint in the reinsurance business in late 2007, the words "excess capital" were on everyone's lips. Reinsurers had record capital on hand and were pushing dividends and share buybacks because they couldn't find ways to make it productive. Two years later, we're getting close to those record levels, according to a new report from Aon Benfield (AON), despite everything that's happened in between – the financial crisis, Hurricanes Gustav and Ike and the earthquake in Chile, for example.

If you look at the financials, it's almost like nothing has changed, and let's hope the lessons learned in between aren't obscured by the full pockets that reinsurers can now boast.

Florida's insurer for high-risk homeowner policies, Citizens Property Insurance Corp., is issuing a bond to beef up its balance sheet. The state property insurer, which takes on the risks that private insurers in the state will not, is looking to raise around $2.5 billion.

The "pre-sale" ends on April 6, 2009 and was called "very successful" by Citizens CFO Sharon Binnun, who continued, "We met our liquidity goal for the year." A quiet hurricane season in 2009 left Citizens, the largest property insurer in the state, with a surplus of around $14 billion.

This year, you can expect experienced catastrophe bond issuers in the insurance and reinsurance sectors to dominate the market, as they did in 2009. Instead of replacing maturing bonds, however, many will be turning to new transactions. Fresh moves are likely, therefore, in a sector that could double last year's issuance total and at least approach the 2007 record of $7 billion in risk capital.

Eighteen tranches of eight cat bonds are set to mature in the second quarter, according to the Thomson Reuters Insurance Linked Securities Community. On the eve of hurricane season in the Gulf of Mexico, $2.77 billion in risk capital will mature, including State Farm's $1.2 billion Merna Re transaction, the largest transaction in the history of this form of risk transfer. Only part of Merna Re will be replaced by Merna II, with industry trade publication Trading Risk, which is put out by the Insurance Insider, reporting that the $250 million successor to Merna Re has been upsized to $700 million.

After weeks of speculation, the financial damage from the Chile earthquake and Windstorm Xynthia in Europe is starting to emerge. According to a recent report by Moody's, 16 global reinsurance companies have reported their net insured losses (before taxes) from the catastrophe event, and the damage has already reached $3.5 billion, increasing an already high tally. The firm expects these events to have a noticeable impact on first quarter results for the industry.

According to the report, the first quarter of 2010's results "will have many moving pieces, including the possibility of favorable loss reserve development." It continues, though, that "we would expect a number of reinsurers to post both operating and net losses for the quarter."

It's not an unusual problem at this time of year. We're a few months from June 1, the official start of hurricane season, at least as far as the insurance industry is concerned. Through April and May, the Florida legislature will rush to nail down details pertaining to Citizens Property Insurance Corporation, the state entity that provides insurance to some homeowners (usually when risk is too high for private insurers to accept), and the Florida Hurricane Catastrophe Fund, which provides some reinsurance protection to carriers writing property-catastrophe risk in Florida.

And even earlier, the editorials start to fly. There are concerns over whether homeowners will get sufficient coverage. There are questions about thinly capitalized Florida carriers. This is an annual ritual, of sorts, and 2010 is no different. Already, the Sarasota Herald-Tribune is raising the issue of whether some local carriers are sufficiently capitalized. Ultimately, this isn't much of a problem – unless a hurricane hits.

Mother Nature and mankind took it easy on the insurance industry in 2009. The total cost of both natural and man-made catastrophes fell profoundly in 2009, from $267 billion to $52 billion.

Insured losses fell, as well, according to Swiss Re (SWCEY). Insured natural catastrophe losses dropped to $21 billion, with the man-made variety hitting a mere $3 billion. Combined, insured losses pushed up to $50 billion in 2008, thanks in large part to the effects of Hurricanes Gustav and Ike.

This was one of those days where profit takers had the markets soft all morning, but strong pending home sales rallied the stock market and trumped an inverted spending and income figure. A revision for a lower hurricane season helped insurers.

Here were today's unofficial closing bell levels:

Dow 9,315.51 +28.95 (0.31%)
S&P 500 1,004.86 +2.23 (0.22%)
Nasdaq 2,008.80 +0.19 (0.01%)

Top Analyst Upgrades/Downgrades

As late as yesterday, forecasters believed that powerful Hurricane Ike would hit south Florida. Projections from the weather man now put its path straight over Cuba and into the Gulf of Mexico. The would make its U.S. landfall in either Texas or New Orleans. It would also bring it close to refineries and oil platforms that where threatened by weaker storms that ended up doing very little damage.

Ike, on the other hand, is a Category 4 storm, and that means the its damage could be exponentially greater than any storm that has hit the Gulf in three years. That leaves the potential of a real interruption in oil production and an increase in crude and gas costs.

So far, the price of oil has been immune to the weather, but OPEC may lower production and, combined with a big storm, crude begin to move back up toward $120.

The prevailing wisdom is that oil is on its way to under $100. But, prevailing wisdom has been wrong before.

Douglas A. McIntyre is an editor at 247wallst.com.

Beyond the torment it has already caused in the Carribbean and the stress it places on those who are evacuating the Gulf Coast, hurricane Gustav will lead to higher prices at the pumps. That's because the majority of the Gulf of Mexico's oil production is shut down in anticipation of Gustav's force.

Exactly how much production is being shut down? CNNMoney reports that "energy producers have shut in approximately 77% of oil output and 37% of natural gas production in the Gulf of Mexico." This is affecting three producers particularly hard -- Royal Dutch Shell PLC (NYSE: RDS.A), BP PLC (NYSE: BP) and Chevron Corp. (NYSE: CVX).

And the production shut-down is significant -- "nearly 1 million barrels of daily oil production is now shut down. The last time this happened was in November 2005, after Hurricanes Katrina and Rita. In addition, 2.75 billion cubic feet of daily natural gas production is now shut down" according to CNNMoney.

Hurricane Dean's presence in the Western Caribbean has forced over a dozen cruise ships to quickly change their itinerary towards the eastern side of the Caribbean this week. The storm, currently moving as a Class Three hurricane through the Yucatan peninsula, has affected Carnival Corp. (NYSE: CCL) the most.

According to the company's site, as of Sunday, August 18th, the itineraries of over ten Carnival ships have been altered, forcing them to dock in Eastern ports-of-call or cancel a part of their stay. CruiseCritic.com has reported that a dozen of Carnival's ships were impacted from Dean. The company could not be reached for comment. Only three Royal Caribbean Cruises Ltd (NYSE: RCL) ships needed to steer clear of the storm.

Despite many weather stations calling Jamaica "Ground Zero" all weekend, the island nation received a glancing blow on Sunday. Gene Sloan of USAToday's "The Cruise Log" reported today that Royal Caribbean will be the first to test Jamaica's waters on Wednesday, as originally scheduled. Carnival's spokesman Vance Gulliksen told Sloan their line expects to resume calls in Jamaica next week and plans to return to the Caymans as early as later this week, but is "awaiting final confirmation."

The major question is the impact of Dean on Cozumel and other Mexican ports on the Yucatan Coast. Check out CruiseCritic.com's Hurricane Zone for an updated list of the damage reports.

During the summer, two things most Americans relate to are higher temperatures and higher natural gas prices. This year, however, happens to be an exception.

During the summer, there are two key factors that control the price of natural gas: the potential for hurricanes in the Gulf of Mexico, and the amount of gas in storage. Luckily, the country hasn't experienced a severe weather event since Tropical Storm Barry opened the hurricane season in June. Natural-gas futures have fallen nearly 13% since the $8 highs last month, down to the $6.75 region, mostly because of the amount of gas already in storage. Paul Flemming, director of power & gas research at Energy Security Analysis told the Wall Street Journal (subscription required) that gas prices could drop $1 if the Gulf can make it through this year's hurricane season unscathed.

Now comes the added new finds from the Independence Hub off the coast of Louisiana, an offshore platform owned by Anadarko Petroleum Corp (NYSE: APC), which is expected to ship 50 million cubic feet of gas daily starting today, and ramp to 1 billion cubic feet -- 1.5% of domestic production -- over the next few months: natural-gas futures are nearly down 3.7%, to $6.48 on the news.

When storage hits capacity, prices tend to drop. Tancred Lidderday, an economist with the Energy Information Administration, believes the market is close to hitting capacity. The EIA reported Thursday there is 2.69 trillion cubic feet of gas in storage, or 16% above the five-year average for storage at this time. The Independence Hub can only improve that storage capacity. With consumption expected to rise 4.3% in 2007 and a modest 1.1% in 2008, it doesn't look like natural gas prices will surge this summer unless a major storm rolls right into the Gulf.