Hurricane Sandy's Impact on Insurers: TRV, ALL, CB, and BRK.B in Focus
The good news is, overall insurance claims made by customers of The Travelers Companies, Inc. (NYSE:TRV), The Chubb Corporation (NYSE:CB), The Allstate Corporation (NYSE:ALL), and most other property insurers have been mild in comparison to 2011 (when tornadoes devastated much of the U.S., and when a tsunami rocked Japan). The bad news is, hurricane Sandy - aka Frankenstorm - looks like the worst storm we've seen in a century, and there's really no telling what kind of payout liability companies like CB, ALL, and TRV are going to end being on the hook for.
It's always a guess, but so far, experts are at least certain hurricane Sandy is going to create billions of dollars worth of damage in the northeast. One firm figure that has been put in the table is $3 billion, though that may just be wishful thinking.
For perspective, U.S insurers were responsible for $32 billion in damages in 2011, largely stemming from an outbreak of tornadoes in April of last year. Year-to-date, claims were only rolling in at about half of last year's levels (though 2012's 'half' is also closer to the longer-term 'norm' for names like The Chubb Corporation, The Allstate Corporation, and The Travelers Companies).
But, how bad can one hurricane make it for the property insurers? In 2011, Irene caused $4.3 billion in insured damages - and roughly $10 billion in uninsured damages - while tracing its way up the East Coast, all the way from North Carolina to New Hampshire. Though Sandy isn't going to run into the Carolinas or Virginia, it's also much bigger than Irene, and could do more damage to the part of the country that's most compacted with property to damage... New York.
That's bad news for The Travelers Companies and The Allstate Corporation, as well as Berkshire Hathaway Inc. (NYSE:BRK.B), as those three companies are New York's biggest property and casualty insurers. BRK.B accounted for 8.0% of property insurance premiums in state in 2011, followed by ALL, with a market share of 7.7%, and then TRV, with its 6.3% share of the P&C market. The Chubb Corporation is still up there though, with a 3.4% market share for the northeast region of the United States. Allstate is also pretty well exposed to the entire northeast region, with another 3.4% of that total property and casualty insurance market.
Bryan Murphy is a paid contributor of the SmallCap Network. Bryan Murphy's personal holdings should be disclosed above. You can also view SmallCap Network's complete disclaimer and disclosure.
Do NOT buy or sell CB, TRV or ALL until you have read everything.
SmallCap Network provides comprehensive research and opinions on CB, TRV and ALL. |
 |
|
| Date: | May 22, 2013 | |
| Price: | Free | |
| Example Preview: |    |
|
