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Property and casualty insurance stocks slump on Hurricane

Milton-related fears

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Another catastrophe adds to insurers' Florida woes

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Analysts say the full extent of hurricane season damage

still

unknown

By Manya Saini

Oct 7 (Reuters) - U.S. property and casualty insurance

stocks tanked on Monday after Hurricane Milton intensified into

a category 4 on its path toward 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 been elevated 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 already grappled with multiple major hurricanes

in 2024 including Hurricane Debby striking Florida in August,

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 2.44% 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 27%. Universal Insurance ( UVE ), and

HCI Group ( HCI ), fell 14% and 16%, respectively.

Insurance broker Aon in a report late on Sunday said that

while its too early to gauge the exact magnitude and location of

the greatest impacts, there is 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.

Sector bellwether Travelers Companies ( TRV ) was last down

3%, while Allstate ( ALL ) and Assurant ( AIZ ) declined 3.3%

and 4%.