US property and casualty insurers' shares slump as hurricane season losses mount
Property and casualty insurance stocks slump on Hurricane Milton-related fears
Another catastrophe adds to insurers' Florida woes
Analysts say the full extent of hurricane season damage still unknown
Adds Generac's stock performance in paragraph 14; Updates prices throughout
By Manya Saini
Oct 7 (Reuters) -U.S. property and casualty insurance stocks tanked on Monday after Hurricane Milton intensified into a category 4 storm on its path towards Florida's western coast, marking yet another costly disaster for the industry to cover this year.
Insurers are expected to face catastrophe-related claims for billions of dollars from a devastating hurricane season. Catastrophe losses refer to a significant financial hit that insurance companies incur due to large-scale natural or man-made disasters.
These events have intensified over the past few years and have significantly hurt profits due to substantial payouts tied to widespread property damage, business interruptions and liability claims.
The U.S. has grappled with multiple major hurricanes in 2024, including Hurricane Debby striking Florida in August, Hurricane Francine which made landfall in Louisiana in September, and more recently Hurricane Helene that hit Florida in the same month.
The S&P Insurance Select Industry .SPSIINS index was last down 3.1% on Monday.
MOUNTING LOSSES
Severe and frequent natural disasters have exacerbated the industry's retreat from high-risk areas, particularly Florida. The costs of reinsurance have also risen sharply in the state, making it more expensive for insurers to operate.
"Investors are not only thinking about the short-term hit to earnings but also the long-term affect weather change and a seasonal uptick in damage will do to the business," said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.
"Their credit ratings have been largely unaffected in the short term; however, if extreme weather drives people away, their long-term revenue models may be affected," Schulman said.
On Monday, Florida was preparing for the largest evacuation since 2017 as Milton intensified in the Gulf of Mexico on its path toward its western coast, coming on the heels of the devastating Hurricane Helene. It had the potential to affect areas already wrecked by Helene.
Heritage Insurance HRTG.N, which has a big footprint in the state, was last down 25%. Universal Insurance UVE.N and HCI Group HCI.N fell 18% and 17%, respectively.
Sector bellwether Travelers Companies TRV.N was last down 4%, while Allstate ALL.N and Assurant AIZ.N declined 5% and 4.4%, respectively.
Meanwhile, Generac GNRC.N, which makes generators that power homes during an outage, surged more than 8% on Monday as investors bet on increased demand arising from the hurricane-related disruptions.
Insurance broker Aon said in a report late on Sunday there was an increasing risk of life-threatening storm surge and damaging winds for portions of the west coast of the Florida Peninsula beginning Tuesday night or early Wednesday.
The U.S. hurricane season is expected to end on Nov. 30. Forecasts have pointed to an above-normal activity this year due to unusually warm sea surface temperatures in the tropical Atlantic, coupled with La Nina weather patterns.
"The insurance industry must be prepared for the possibility of a challenging second half of the year," broker Gallagher Re said in a July report.
"These conditions, in tandem with the influence of climate change, have aided in more unpredictable and extreme events in 2024."
Where Hurricane Milton is expected to hit https://reut.rs/3Yd4Azi
Reporting by Manya Saini in Bengaluru; Additional reporting by Lance Tupper in New York; Editing by Vijay Kishore and Krishna Chandra Eluri
Actifs liés
Dernières actualités
Avertissement : Les entités de XM Group proposent à notre plateforme de trading en ligne un service d'exécution uniquement, autorisant une personne à consulter et/ou à utiliser le contenu disponible sur ou via le site internet, qui n'a pas pour but de modifier ou d'élargir cette situation. De tels accès et utilisation sont toujours soumis aux : (i) Conditions générales ; (ii) Avertissements sur les risques et (iii) Avertissement complet. Un tel contenu n'est par conséquent fourni que pour information générale. En particulier, sachez que les contenus de notre plateforme de trading en ligne ne sont ni une sollicitation ni une offre de participation à toute transaction sur les marchés financiers. Le trading sur les marchés financiers implique un niveau significatif de risques pour votre capital.
Tout le matériel publié dans notre Centre de trading en ligne est destiné à des fins de formation / d'information uniquement et ne contient pas – et ne doit pas être considéré comme contenant – des conseils et recommandations en matière de finance, de fiscalité des investissements ou de trading, ou un enregistrement de nos prix de trading ou une offre, une sollicitation, une transaction à propos de tout instrument financier ou bien des promotions financières non sollicitées à votre égard.
Tout contenu tiers, de même que le contenu préparé par XM, tels que les opinions, actualités, études, analyses, prix, autres informations ou liens vers des sites tiers contenus sur ce site internet sont fournis "tels quels", comme commentaires généraux sur le marché et ne constituent pas des conseils en investissement. Dans la mesure où tout contenu est considéré comme de la recherche en investissement, vous devez noter et accepter que le contenu n'a pas été conçu ni préparé conformément aux exigences légales visant à promouvoir l'indépendance de la recherche en investissement et, en tant que tel, il serait considéré comme une communication marketing selon les lois et réglementations applicables. Veuillez vous assurer que vous avez lu et compris notre Avis sur la recherche en investissement non indépendante et notre avertissement sur les risques concernant les informations susdites, qui peuvent consultés ici.
