| | | Insurance brokers a safe bet against Hurricane Milton; reinsurers vulnerable - analysts
Oct. 08, 2024 9:59 AM ET
By: Max Gottlich, SA News Editor
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With Hurricane Milton seen making landfall midweek as a category 3 storm (or stronger), analysts are calling for an outsized insurance loss event. Until the exact path is known, reinsurance stocks are expected to see further volatility, while insurance broker stocks could be a defensive play.
Depending on how much damage the West Florida storm causes, insured losses could range from $10B to $100B, Wells Fargo's Elyse Greenspan wrote in a note, citing BMS estimates. She noted that markets appear to be pricing in a loss of more than $50B.
Property and casualty insurance stocks fell markedly Monday on the prospect of rising claims from their policyholders, before paring some losses in Tuesday morning trading. The SPDR S&P Insurance ETF (NYSEARCA: KIE) edged up 0.8% at press time.
Greenspan's base case for P&C insurance losses is $20B.
In all, she wrote, "reinsurance stocks should continue to be volatile," while insurance brokers could be a safe bet as they wouldn't incur losses from the storm "and should benefit from any price firming post Milton."
Net of reinsurance, Progressive (NYSE: PGR), Allstate (NYSE: ALL) and Chubb (NYSE: CB) have the most homeowners' exposure among the primaries, while RenaissanceRe Holdings (NYSE: RNR) and Everest Group (NYSE: EG) have the most exposure among reinsurers, Evercore ISI analyst David Motemaden wrote in a Monday note.
In commercial property, he added, Chubb and American International Group (NYSE: AIG) have the most exposure in his overall coverage, although AIG "is well protected given extensive reinsurance purchases."
Insurance brokers: Arthur J. Gallagher ( AJG), Brown & Brown ( BRO) Marsh & McLennan ( MMC).
Reinsurers: Arch Capital Group ( ACGL), Oxbridge Re Holdings ( OXBR), Reinsurance Group of America ( RGA).
P&C insurers: Aflac ( AFL), Travelers Companies ( TRV), Hartford Financial Services Group ( HIG), Cincinnati Financial ( CINF). |
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