Shares of U.S. and European carriers jumped on Monday, with firms especially exposed to Florida posting sharp gains, as the losses from strong storm Irma were viewed as being less severe than feared.
Insurance stocks are jostled since late last month as investors expected significant losses after Hurricane Harvey hit Texas and the southern United States and Irma approached.
Shares of Florida insurance companies Heritage Insurance Holdings Inc , HCI Group Inc and Universal Insurance Holdings Inc all climbed about 15 percent, while property and casualty insurer United Insurance Holdings Corp gained 10 percent.
These stocks have been hit hard last week as investors braced for Irma, but with Monday’s gains have mostly retraced their losses.
Shares of bigger insurers Travelers Companies Inc and Chubb Ltd climbed about 3 percent.
The Dow Jones U.S. Insurance index gained 1.5 percent ahead of the 0.8-per-cent profit for the entire Samp;P 500 .
Downgraded from a hurricane to a tropical storm, Irma bombarded several northern Florida cities with heavy rain and a large storm surge on Monday as it headed from the nation after cutting power to millions and ripping roofs off houses.
“We expect (property and casualty) stocks to trade up on Monday, as Hurricane Irma’s landfall on Florida’s west coast suggests business declines below the ‘worst-case’ of a direct hit to Miami,” analysts at Keefe, Bruyette amp; Woods said in a research note.
In Europe, stocks of reinsurers Swiss Re AG and Scor SE climbed more than 3 percent and insurers helped drive stock indicators in the area.
Among other reinsurers, Aspen Insurance Holdings stocks rose 9.8 percent while Everest Re and XL Group were up more than 5 percent.
Additionally subjected to Florida, Axis Capital gained 6 per cent while Alleghany Corp rose 3.7 percent and Arch Capital was up 2.8 percent.
“Irma’s devastation is still unfolding, but it seems like the monetary losses could be less than initially feared,” Morgan Stanley analysts said in a research note. They said preliminary business losses were estimated at $15 billion to $50 billion in the USA, and $5 billion to $15 billion from the Caribbean.
Courtesy: The Globe And Mail