Oct

13

Milton's travel through Florida had the eye wall intact straight through until it got to the Atlantic. Strong storm. Among the 4 strongest in the history of the Atlantic. One thing is clear though: There's a lot of destruction from this storm.

Hence, I have to wonder if there are going to be any insurers left in the Florida market, and if there are any left, which ones? I'm not sure that those insurers still there will make for good investment, but maybe they'll be able to survive in that market. It just seems unlikely.

Art Cooper responds:

There will certainly be private P&C insurers (in addition to state-created Citizens Property Insurance Company) continuing to do business in FL after Milton, but I strongly suspect they will continue to increase their restrictions on coverage. I understand that many victims of Hurricane Helene who thought they had coverage for its damage are being shocked to find out they either didn't, or did not to the extent to which they'd believed.

Historically, the aftermath of an event causing massive insurance claims is an opportune time to invest in carriers doing a lot of business in the affected area, because marginal carriers cease writing policies, thereby minimizing competition, and the event provides cover for dramatic rate increases. (Buy when there's "blood in the streets".) If you're bullish on the P&C sector, wait till after billions of dollars of claims are made, then try to buy at support levels.

I don't have any numbers on net migration out of FL, but I can attest anecdotally that the pandemic-induced flood into the state has ended. Bear in mind, however, that migration to FL has been characterized by wild swings for the past 100 years, and I'm confident it will continue to be volatile. Weather events such as Helene and Milton, and more importantly the greatly increased cost of homeowner's insurance, will of course be inhibiting factors going forward.

Carder Dimitroff writes:

I understand why some would consider NEE for short positions. I can see why the market might ping them. If the price sinks and the value is right for you, consider buying NEE as others sell.

Why? NEE Florida's assets are regulated. Within the state, they operate on a cost-plus-a-margin basis. They have a good relationship with the state's regulators (the state needs them). Their power plants and wires may be damaged, but the state's ratepayers will likely cover all their losses. There may be a temporary cash flow issue, but even those costs will be covered. For traders, it might take a year for NEE to recover financially.


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  1. Art Cooper on March 8, 2025 5:28 pm

    “It’s a Surprisingly Good Time to Be in the Property Insurance Business”:

    https://www.wsj.com/finance/its-a-surprisingly-good-time-to-be-in-the-property-insurance-business-202cc55d?st=niBkck&reflink=desktopwebshare_permalink

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