Property and casualty insurers based in Florida saw their stocks slide as Hurricane Dorian
Overall, insurance companies and the broader market had a positive week. The S&P 500 climbed 2.78% to 2,926.46 for the week ending Aug. 30, while the SNL U.S. Insurance Index added 1.41% to close at 1,051.97.
The National Hurricane Center in its 2 p.m. ET advisory on Aug. 30 said Dorian had become a Category 3 storm. It is forecast to strengthen to at least a Category 4 storm before potentially making landfall somewhere along the southeastern U.S. coast over the Labor Day weekend.
Florida Gov. Ron DeSantis earlier in the week declared a state of emergency for the counties on the east coast projected to be in the storm's path. Dorian as a Category 1 hurricane hit the U.S. Virgin Islands, causing power outages and flooding. Puerto Rico managed to avoid the brunt of the hurricane's impact.
Insurers generally tend to see their stocks sag as hurricanes approach the U.S. mainland, Sandler O'Neill analyst Paul Newsome said in an email. They tend to rebound if the storms do not make landfall or when the insured damage totals are reasonably known for each company affected, he said.
CoreLogic estimated that 668,052 single-family and multifamily homes along the east coast of Florida, with a total reconstruction cost value of approximately $144.6 billion, are at potential risk of storm surge damage from Dorian, based on a projected Category 3 status at landfall.
Shares of Florida-focused P&C companies were among the week's biggest decliners. Universal Insurance Holdings Inc. declined 4.80%, HCI Group Inc. dropped 5.23%, FedNat Holding Co. moved down 5.27% and United Insurance Holdings Corp. slid 5.10%.
A number of reinsurers also took a hit, with AXIS Capital Holdings Ltd. falling 4.57%, RenaissanceRe Holdings Ltd. sliding 2.36% and Everest Re Group Ltd. declining 3.68%. Reinsurance Group of America Inc., on the other hand, gained ground and finished the week up 4.49%.
P&C brokers were among the insurance industry's strongest performers. Brown & Brown Inc. added 4.15%, Marsh & McLennan Cos. Inc. rose 4.42% and Willis Towers Watson PLC gained 4.58%. Arthur J. Gallagher & Co. recorded a more modest increase of 3.07%.
A number of the biggest names in the life insurance space experienced little net movement to the positive or negative sides.
Athene Holding Ltd. and asset manager Apollo Global Management LLC this week agreed to buy PK AirFinance SA, an aviation lending business from GE Capital Aviation Services Inc. Financial details of the transaction were not disclosed, but a news release from General Electric Co. and Athene said $3.6 billion of PK AirFinance financing receivables held for sale in the second quarter are being sold at a premium to book value in the deal.
Athene's stock ticked up 1.75%.
Fitch on Aug. 29 upgraded its ratings on American Equity Investment Life Holding Co. The rating agency said the upgrade reflects the company's enhanced business profile and improved financial leverage. The company's shares climbed 1.94%.
The insurance sector's worst performer for the week was eHealth Inc., which saw its shares tumble 13.16%.
