Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

U.S. Insurers Slump as Trading Resumes After Sandy

Oct. 31 (Bloomberg) -- U.S. property insurers declined on the first trading day in New York after Atlantic superstorm Sandy lashed the U.S. and a risk modeling firm said the damage could cost the industry as much as $15 billion.

Allstate Corp., the largest publicly traded U.S. home insurer, dropped 1.3 percent to $39.62 at 9:44 a.m. in New York. American International Group Inc. slipped 0.9 percent and Travelers Cos. dropped 1.3 percent.

The storm will probably cost insurers $7 billion to $15 billion, AIR Worldwide said yesterday, an estimate that accounts for physical damage to property, business-interruption coverage and additional expenses for displaced residential policyholders. The higher figure would make Sandy the third costliest U.S. hurricane, after Katrina, which caused more than $40 billion in losses in 2005, and 1992’s Hurricane Andrew.

“Sandy’s diameter was nearly twice the size of other massive hurricanes including Katrina,” said Tim Doggett, Boston-based AIR Worldwide’s principal scientist, in a statement yesterday. The size “allowed the storm to interact with an approaching disturbance in the jet stream that resulted in severe weather across a wide swath of the eastern U.S.”

The costs may lower book value, a measure of assets minus liabilities, by 2 percent for the property-casualty industry, with a reduction of as much as 5 percent at companies with a high concentration of risk in the hardest-hit areas, according to Keith Walsh, an analyst at Citigroup Inc.

Declines today provide an opportunity to buy shares of Northbrook, Illinois-based Allstate, AIG and RenaissanceRe Holdings Ltd., the Bermuda-based insurer, said Josh Stirling, an analyst at Sanford C. Bernstein & Co. All three companies are scheduled to announce third-quarter results this week.

The insurers will probably beat analysts’ expectations “and this provides an immediate catalyst likely to help reverse negative momentum in the stocks,” Stirling said.

RenaissanceRe fell 1 percent.

To contact the reporter on this story: Noah Buhayar in New York at nbuhayar@bloomberg.net;

To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.