U.S. property insurers declined on the first trading day in New York after Atlantic superstorm Sandy lashed the U.S. and a risk modeling firm said the damage could cost the industry as much as $15 billion.
Allstate Corp., the largest publicly traded U.S. home insurer, dropped 2.9 percent to $39 in early trading at 9:13 a.m. in New York. American International Group Inc. slipped 1.1 percent and Travelers Cos. dropped 1.8 percent.
The storm will probably cost insurers $7 billion to $15 billion, AIR Worldwide said yesterday, an estimate that accounts for physical damage to property, business-interruption coverage and additional expenses for displaced residential policyholders. The higher figure would make Sandy the third costliest U.S. hurricane, after Katrina, which caused more than $40 billion in losses in 2005 and 1992’s Hurricane Andrew.
“Sandy’s diameter was nearly twice the size of other massive hurricanes including Katrina,” said Tim Doggett, Boston-based AIR Worldwide’s principal scientist, in a statement yesterday. The size “allowed the storm to interact with an approaching disturbance in the jet stream that resulted in severe weather across a wide swath of the eastern U.S.”
The costs may lower book value, a measure of assets minus liabilities, by 2 percent for the property-casualty industry, with a reduction of as much as 5 percent at companies with a high concentration of risk in the hardest-hit areas, Keith Walsh, an analyst at Citigroup Inc., said in a note today.
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