RenaissanceRe Holdings Inc. and PartnerRe Ltd. are among reinsurer stocks recommended by Barclays Plc in a short-term “hurricane trade” that analyst Jay Gelb said has worked in seven of the last nine years.
“We recommend a short-term buying opportunity for catastrophe-exposed P&C insurance stocks in the month of September as the typical peak of hurricane season approaches,” Gelb said today in a research note. “Once the peak of hurricane season has been reached, the stocks have historically outperformed.”
Reinsurers that backstop property and casualty risks are bracing for the second half of the Atlantic hurricane season, which runs from June through November. Homeowners and businesses from North Carolina to Maine are tallying the damage left by Hurricane Irene as Katia, the 11th named storm of the season, gains strength over the ocean.
“Over the past nine years, on average, our index of P&C insurers with the most exposure to Atlantic hurricanes increased 4 percent in September versus 0 percent” for the Standard & Poor’s 500 Index, Gelb said. Everest Re Group Ltd., RenassianceRe and PartnerRe, all based in Bermuda, have “the greatest sensitivity to hurricane season,” Gelb said.
Munich Re, Swiss Re Ltd. and Warren Buffett’s Berkshire Hathaway Inc. are the world’s biggest reinsurers.