Despite estimates that Hurricane Katrina may become the most damaging U.S. hurricane, one analyst suggested it is a time to buy shares in insurers whose stock prices sagged with the arrival of the storm.
"We would be buyers of p-c insurance companies on any weakness in the stocks today, given that the impact to the stocks tends to [be] of greater magnitude than would [be] implied by the damage to insurers' balance sheets," wrote Jay Gelb, Lehman Brothers Equity Research analyst.
Hurricane modelers have estimated that damage from Katrina==which hit Louisiana today as a Category 4 storm on the five point Saffir-Simpson scale==could be larger than Hurricane Andrew in 1992, which caused $22 billion in insured damage, and was the most damaging hurricane in history.
According to Lehman Brothers, among the carriers with the most exposure are RenaissanceRe Holdings Ltd.; Everest Re Group Ltd., Arch Capital Group Ltd., and XL Capital Ltd.
The firm said companies with moderate exposure are Allstate, PartnerRe Ltd., ACE Ltd., Safeco Corp and St. Paul Travelers Companies. Least affected are American International Group, Progressive, Chubb Corp. and The Hartford.
Lehman noted that losses from flooding tend not to be covered by insurance companies.
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