The beginning of the year was the insurance industry’s oyster.
The Federal Reserve had just begun ratcheting up key benchmark interest rates, meaning plenty of profits for the sector’s large bond-backed floats. Meanwhile, underwriting gains in the industry were near post-recession highs. Naturally, stocks in the insurance sector were up on all the positives.
And then two of the worst storms in over a century decided to make landfall in the U.S.
Since the end of August, the insurance sector has been in a tizzy, rocked by the potential losses stemming from Hurricanes Irma and Harvey. The question now is whether those losses were justified or is this a big buying opportunity for investors.
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Two of America’s Costliest Storms
Every hurricane season, property and casualty insurance industry – and their reinsurance twins – brace for the impact. And, usually, there are claims to be paid out. But ever since Hurricane Katrina back in 2005, the massive storms that have made landfall have been pretty sanguine. So when, this year, the forecast called for two huge storms churning in the Gulf of Mexico, investors in the insurance sector headed for the exit.