3 Insurance Company Stocks to Own Ahead of 2024’s Active Hurricane Season


  • Though a short-term hit to cash reserves, insurance companies tend to boom after disasters thanks to raising their premiums.
  • Allstate (ALL): One of America’s largest insurance companies, Allstate’s position in Texas could be lucrative if a hurricane enters the Gulf of Mexico.
  • Chubb (CB): The world’s largest publicly traded insurer has the size to profit generously from natural disasters,
  • Berkshire Hathaway (BRK-A, BRK-B): As the owners of GEICO and members of the NFIP, BRK-B has several ways to profit from hurricane floods.
Insurance Stocks to Buy - 3 Insurance Company Stocks to Own Ahead of 2024’s Active Hurricane Season

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Just like homeowner’s insurance, there are some fantastic insurance stocks to buy prior to hurricane season. There’s no debating the terrible toll that hurricanes take. From the Caribbean to the Northeast, no part of the North Atlantic coastline is safe from these natural disasters. With Hurricane Katrina’s $161 billion in damages, Hurricane Sandy’s $70 billion and Harvey’s $155 billion, hurricanes have cost the economy nearly half a trillion dollars in repair costs since 2000.

Sadly, hurricane damage is measured not in lives lost or homes destroyed, but in dollars. On one hand, this elucidates the ever-present fact that money drives American society. On the other, it means that someone, or some corporation, ultimately profited from the rebuilding of the destruction.

In the case of Hurricane Sandy, insurance companies profited $400 million due to government programs and premiums collected. As such, investors should keep an eye on which insurance stocks to buy as we approach hurricane season.

Allstate (ALL)

Allstate Insurance office
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Ranking in the top three insurance companies in Texas and providing coverage to millions of Florida homeowners, Allstate’s (NYSE:ALL) size means it cannot avoid hurricane season. Due to its exposure to hurricane-prone regions of the U.S., Allstate would likely have to provide substantial payouts to customers in the event of one. This, in turn, would cause a dip in its stock price in the short term but ultimately cause Allstate stock to surge once it naturally increases premiums.

Beyond this, Allstate insures over 16 million households across the United States and has taken over 8.92% of the home insurance market. This allowed Allstate to generously expand its Q1 2024 revenue to $15.26 billion, up 10.7% year-over-year. $12.9 billion of this revenue came from property-liability premiums, meaning Allstate will almost certainly bolster revenue in the wake of a destructive hurricane season.

Chubb (CB)

Person holding cellphone with logo of Swiss insurance company Chubb Limited on screen in front of business webpage. CB stock.
Source: T. Schneider / Shutterstock

As the world’s largest publicly traded property and casualty insurer spread across 54 countries, Chubb (NYSE:CB) has two methods of hiking premiums in the event of catastrophic hurricanes. Off the bat, the majority of Chubb’s homeowner policies provide what it refers to as “all-risk” coverage. This includes damages caused by hurricanes or windstorms, meaning any of its U.S. customers affected are subject to premium hikes.

The second aspect of Chubb’s coverage offers a property management service that provides proactive assistance to people with secondary and seasonal homes. This allows Chubb to expand its coverage to people with vacation homes in areas at extended risk of hurricanes.

As a result, Chubb has multiple avenues to hike its premiums in the event of a major disaster. Its size may act as a buffer against a price dip in the wake of paying out repair costs.

Berkshire Hathaway (BRK-A,BRK-B)

Berkshire Hathaway stock
Source: Sergio Photone / Shutterstock.com

As GIECO’s owner and a major property investment firm, Berkshire Hathaway (NYSE:BRK-A,BRK-B) stands doubly exposed to economic ramifications from hurricanes. With its insurance customers through GEICO, Berkshire Hathaway has control of 14.05% of the U.S. auto insurance market. While GEICO’s policies are more specialized, it is one of the primary members of the National Flood Insurance Program (NFIP). 

Through this system, GEICO can sell policies and collect premiums from customers up until the occurrence of flooding. The U.S. government allows insurers to keep a third of the premiums, meaning extra revenue for NFIP insurance companies. The premiums collected from those subsidized policies should then cover losses. 

However, once the premiums run dry, the government steps in to cover the remaining costs. This means companies like GEICO receive protection from losses while taxpayers pick up the tab. Though arguably unfair, it does make for some strong revenues for companies like Berkshire Hathaway when hurricanes occur.

On the date of publication, Viktor Zarev did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Viktor Zarev is a scientist, researcher, and writer specializing in explaining the complex world of technology stocks through dedication to accuracy and understanding.

Article printed from InvestorPlace Media, https://investorplace.com/2024/05/3-insurance-company-stocks-to-own-ahead-of-2024s-active-hurricane-season/.

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