Staff Reports
Shares of Florida home insurers, including Heritage Insurance Holdings, tumbled on Tuesday and many extended losses later in the day as Hurricane Irma appeared set to hit Florida on Saturday, causing investors to brace for losses.
HCI Group shares posted their biggest-ever one-day percentage drop, falling 20.0 percent at $30.94 and hitting the lowest level since November. Trading volume was 11.6 times the stock’s 10-day moving average.
Heritage shares hit record lows and closed down 17.0 percent at $9.35 with trading volume 7.0 times the stock’s 10-day moving average. Universal Insurance Holdings Inc shares tumbled 14.6 percent in the biggest one-day percentage drop since November 2015.
Irma strengthened to a highly dangerous Category 5 storm, with winds of 185 mph, as it barreled toward the Caribbean and the southern United States, threatening deadly winds, storm surges and flooding.
“If Irma continues its current path it will create significant insured damage,” said Sandler O’Neill analyst Paul Newsome. “It’s quite easy for them to wipe out all their earnings for the year.”
Larger insurance companies with a broader geographic exposure were also lower after tumbling last week on expectations of massive losses from Hurricane Harvey, which devastated parts of Texas and Louisiana.
Shares of United Insurance Holdings fell 7.2 percent, hitting their lowest point since February. Trading volume was 8.1 times the 10-day moving average.
Travelers Co was down 3.7 percent after a 5 percent drop last week, and Progressive Corp was down 3.4 percent after falling 5.7 percent last week. Chubb Ltd fell 2.6 percent.
Another big hurricane in the same year “adds another level of financial losses even for the big companies with enormous capital bases,” Newsome said.
A second hurricane “strains the system” as insurers will have a harder time getting enough people to do loss adjustments in order to settle claims as quickly as possible, he said.
Reporting by Sinead Carew; Editing by Dan Grebler and Leslie Adler of Reuters.
