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Sanford C. Bernstein insurance analyst Josh Stirling on the financial impact of Hurricane Sandy.
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According to disaster or modeling firm at -- capped the insurance industry will face I think is a low ball number but at what -- -- -- ten billion dollars in losses from hurricane sandy.
We've heard estimates from some economists as high as fifty billion dollars one Hollis said and done.
Either way the ten billion dollar number bests that of Hurricane Irene four point three billion dollar industry lost but.
How was this impacting insurance companies on Wall Street who obviously will have to step up to the plate and pay out claims Josh sterling is Sanford -- -- Senior analyst I'm sure you've been doing -- -- modeling Josh what does it show and who gets hit who gets helped.
Our thanks for having -- obviously it's a terrible tragedy and you know but I think ultimately the -- -- ten billion dollar number maybe it's fifteen is another -- -- Appear in Boston that actually has released an estimate that says -- could be as high as fifteen per insured losses.
These are reasonably credible estimates because although this is a dramatic storm -- there.
-- -- compares you know in terms of human suffering a lot of -- lot of the other sort of terrible things we've seen over the over the years.
From an insurance perspective.
Lots you know in a substantial numbers of claims won't actually from -- to private insurance payouts is a lot of action being -- related.
And of course have although the although the storm was really really sort of amassing massive -- -- physical energy it was so vast and widespread.
That the ultimate impact of any one given point was less modest -- -- -- had been any sort of a cat 45 storm so you know unlike in Florida you know you don't have entire towns where you know missing your roots and so.
Yes the end of having you can generally as a matter -- generally the patent claims.
Which you know although we look at the damage -- must be must be astronomical.
You know is actually going to be modestly more reasonable because because -- homes -- homes have been damaged as opposed to completely.
-- let's look at some of the -- -- -- okay we're we're showing year to date charts and that actually the insurers have done pretty beautifully Allstate for example we have child we have travelers.
Hartford financial group HIG you know you look at Berkshire Hathaway which owns Geico which owns.
But general re up some of these will see payouts but you make a very interesting point to -- is.
But -- was not necessarily a wind event it was a storm surge of them much of that is on the covered by government flood insurance but.
If we look for some of the most expensive storms.
Could this be worse than say the Isaacson the hurricane Andrew is a category five at some point overall and how do you see people saying well this looks like wind damage to me vs this is flooding damage.
How we -- actually -- any need the there's there's.
In it in the court of public opinion or -- -- local -- a local towns for these things tend tend to get litigated and it's not always clear what -- what really caused the damage and so.
You know people people five -- insurers for years after Hurricane Katrina.
But it but it's as a practical matter the biggest flood risk in the biggest storm -- risk is actually gonna come not from personal lines customers but rather from commercial lines expenditures and so.
You know this is where people you know not not that there's anyone who who sort of looks this and says it won't be manageable event.
Yeah but -- for likely to get surprises it's going to be.
The questions that sort of you know who ultimately is going to pay for -- damage who cannot -- just quickly ask you Josh before we go could you think comes -- a winner here.
Well you know we we like Allstate here how we think that there's clearly some bad news presents stock but if you look for some context -- -- you know look at the group -- -- -- charts for four.
There's that.
And -- -- is probably the easiest sort of long long term pricing recovery story.
Because they've got substantial number of captive agents try to -- their core distribution model.
And these folks sell only one product and so Allstate is able to push to pretty substantial price increases through when they need to -- And that's giving them that's giving the of the company's earnings and as investors have sort of rediscovered the story over the past years so.
It had a lot of momentum heading this is -- in his pickup in that story as opposed something fundamentally sets it.
Josh good to see you thank you so much.
Josh sterling Sanford C Bernstein insurance analysts watch those insurers -- they that's gonna change moment by moment I can tell you.
