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
Aset Berkaitan
Berita Terkini
Penafian: Entiti XM Group menyediakan perkhidmatan pelaksanaan sahaja dan akses ke Kemudahan Dagangan Atas Talian, yang membolehkan sesorang melihat dan/atau menggunakan kandungan yang ada di dalam atau melalui laman web, tidak bertujuan untuk mengubah atau memperluas, juga tidak mengubah atau mengembangkannya. Akses dan penggunaan tersebut tertakluk kepada: (i) Terma dan Syarat; (ii) Amaran Risiko; dan Penafian Penuh. Oleh itu, kandungan sedemikian disediakan tidak lebih dari sekadar maklumat umum. Terutamanya, perlu diketahui bahawa kandungan Kemudahan Dagangan Atas Talian bukan permintaan, atau tawaran untuk melakukan transaksi dalam pasaran kewangan. Berdagang dalam mana-mana pasaran kewangan melibatkan tahap risiko yang besar terhadap modal anda.
Semua bahan yang diterbitkan di Kemudahan Dagangan Atas Talian kami bertujuan hanya untuk tujuan pendidikan/maklumat dan tidak mengandungi – dan tidak boleh dianggap mengandungi nasihat kewangan, cukai pelaburan atau dagangan dan cadangan, atau rekod harga dagangan kami, atau tawaran, atau permintaan untuk suatu transaksi dalam sebarang instrumen kewangan atau promosi kewangan yang tidak diminta kepada anda.
Sebarang kandungan pihak ketiga serta kandungan yang disediakan oleh XM, seperti pendapat, berita, penyelidikan, analisis, harga, maklumat lain atau pautan ke laman web pihak ketiga yang terdapat dalam laman web ini disediakan berdasarkan "seadanya" sebagai ulasan pasaran umum dan bukanlah nasihat pelaburan. Sesuai dengan apa-apa kandungan yang ditafsir sebagai penyelidikan pelaburan, anda mestilah ambil perhatian dan menerima bahawa kandungan tersebut tidak bertujuan dan tidak sediakan berdasarkan keperluan undang-undang yang direka untuk mempromosikan penyelidikan pelaburan bebas dan oleh itu, ia dianggap sebagai komunikasi pemasaran di bawah peraturan dan undang-undang yang berkaitan. SIla pastikan bahawa anda telah membaca dan memahami Notifikasi mengenai Penyelidikan Pelaburan Bukan Bebas dan Amaran Risiko mengenai maklumat di atas yang boleh diakses di sini.
