(Bloomberg) -- Tropical Storm Hermine, which is poised to land in Florida Friday, may result in “manageable” losses for the insurance industry, according to Keefe Bruyette & Woods analyst Meyer Shields.
The storm is forecast to hit northwest Florida, a region of the state with lower insured property value, Shields wrote in a note to clients Thursday.
Potential losses would be greater if the storm were to strike more-populated areas of the state, he said.
|'Easily absorb a $15B catastrophe loss'
“We think the insurance industry can easily absorb a $15 billion catastrophe loss without generating a negative quarterly return,” Shields said in the note. “Given the preliminary expected loss potential for Hermine and its path trajectory, we don’t anticipate the storm to materially affect pricing trends.”
Hermine’s winds could reach 75 miles (121 kilometers) per hour, just over hurricane-strength, making it the first such storm to hit Florida since Wilma in 2005, according to the U.S. National Hurricane Center. Surge from the storm could be an issue for commercial insurers in the region, Shields said.
|Property coverage writers
Citizens Property Insurance Corp., the government-owned insurer of last resort, along with Universal Insurance Holdings Inc. and Tower Hill Group are the biggest writers of property coverage in Florida, Shields said.
State Farm Mutual Automobile Insurance Co., Allstate Corp. and Nationwide Mutual Insurance Co. are the largest in the U.S. Southeast.
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