Florida-based property and casualty insurers and other large carriers that underwrite auto and home insurance in the Southeastern US performed relatively well in the stock market this week despite the arrival of Hurricane Idalia.

The hurricane made landfall near Keaton Beach, Fla., as a Category 3 storm early Wednesday morning, then moved its way up to Georgia, North Carolina and South Carolina. Karen Clark & Co.'s latest Sept. 1 estimate projects that privately insured losses from Hurricane Idalia will be about $2.2 billion, the majority stemming from wind and storm surge losses in the US. That estimate does not include losses that would be covered under the National Flood Insurance Program.

HCI Group Inc., Universal Insurance Holdings Inc., American Coastal Insurance Corp. and Heritage Insurance Holdings Inc. are among the top non-government underwriters of homeowners insurance in the state of Florida. As of Friday midafternoon, Heritage Insurance was trading up 3.9% for the week ending Sept. 1, while American Coastal Insurance, formerly known as United Insurance Holdings Corp., was trading up 5.6%. HCI Group was down 4.8%. Universal's shares were essentially flat.

Keefe, Bruyette & Woods analyst Meyer Shields compared the insurance impacts of the storm to that of a "really, really big tornado," noting that losses from the storm itself are significant but "nowhere near" what a worse-case hurricane could be.

"The major players in Florida will be impacted, but the reinsurers not so much," Shields said. "It doesn't seem like a big enough storm to really cross attachment points."

Wider impact

Large nationwide insurers including The Progressive Corp. and The Allstate Corp. also hold exposure to the Sunshine State in both the homeowners and auto business lines. Progressive's shares finished up 2.1% as of midafternoon Friday. Allstate's stock gained 5.1%.

Shields also added that the Florida market is "still an odd market" but said the reforms the Sunshine State has made have been the right ones.

"They're really working to limit the losses that insurers have to pay instead of simply letting rates rise," Shields said. "But it still includes a large number of really small companies and that's a risky way to run an insurance market."

Insured losses from Hurricane Idalia are expected to mostly fall into the homeowners and commercial property lines, as well as auto and marine coverage, according to a report released by Moody's Investor Services.

"Insured losses are impacted by construction costs, which increased significantly during the pandemic, and feed through to higher insurance claims," Moody's said in the report. "Increased demand for construction labor and materials following the hurricane will also lead to higher insured losses."

The broader markets also fared decently for the week. As of close of business Aug. 31, the S&P 500 finished up about 2.3% to 4,507.66 while the S&P 500 US Insurance index grew about 0.8% to 597.64.