Hurricane Earl is not only threatening Labor Day plans, it could also threaten some insurers balance sheets.See also yesterday's "A Contrarian Hurricane Earl Trade: Allstate Insurance (ALL)".
"It really depends on exactly where it lands and their market share. It is almost impossible to tell how much the losses will be yet," says Paul Newsome, managing director and the senior insurance analyst at Sandler O'Neill & Partners. "It's probably not going to be a significant insurance event, but you never know."
As the Category 4 storm makes its way through the Caribbean, forecasters and are looking at which part of the US East Coast the storm might hit and are preparing for the catastrophic losses.
Boston-based catastrophe modeling firm AIR Worldwide estimates that losses could be as high as $33 billion based on "a repeat of the 1938 Great New England Hurricane," AIR spokesman Kevin Long says. "Not that Earl is following the same track as the 1938 [storm]... This is just to put things in perspective in terms of insured loss potential."
Michael Nannizzi, executive director of equity research at Oppenheimer, says that Chubb(CB) has the greatest exposure to losses if the hurricane hits the east coast directly. Two other companies that face exposures to the hurricane are Allstate (ALL), and Travelers(TRV).
"If you look at all of the East Coast from the Carolinas northward to Maine, Chubb owns about 9% of the market and Travelers and Allstate own 6% of the market share." Nannizzi added....MORE