*

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 details on hurricane season in paragraphs 15-17; 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 index was last

down 2.7% 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 ), which has a big footprint in

the state, was last down 26%. Universal Insurance ( UVE ) and

HCI Group ( HCI ) fell 15% and 16%, respectively.

Sector bellwether Travelers Companies ( TRV ) was last down

3.5%, while Allstate ( ALL ) and Assurant ( AIZ ) declined 4%

each.

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."