Profiting from Non-Hurricanes

Excerpt from our One-Page WSJ Summary:

Hot Investment: Calm Weather

Summary: September has historically been the worst month for hurricanes in the U.S., and only 16 Category-3 or higher storms have hit in October since 1851. So while it may still be a little early for reinsurers that bet on a calm summer to start counting their profits, as there are formally two months left to hurricane season, a number of players including Berkshire Hathaway (BRK.A) and RenaissanceRe Holdings (RNR) appear to have done very well in this non-catastrophe year. After last year's stormy season, reinsurance premiums have skyrocketed 76% in the U.S. Two BRK.A divisions in the hurricane reinsurance business recorded underwriting losses of $2.02 billion in Q3 last year; if the weather holds, Glenn Tongue of hedge-fund T2Partners LLC predicts that they will record underwriting gains of $400 million in the comparable quarter this year. RNR had revenues of $886.5 million for U.S. hurricane policies last year, and a net loss of $246.8 million in the year. This year, catastrophe premiums are projected to grow more than 40% as the risk doesn't change. A Deutsche Bank analyst projects that the company's after-tax operating income this year will be $612 million.
Related links: Full WSJ article • Stocks Hurt By Katrina Doing Well One Year Later • Ramifications of a Quiet Hurricane Season • Five Small Cap Hurricane Plays
Potentially impacted stocks and ETFs: Other insurers: Endurance Specialty Holdings (ENH), Axis Capital Holdings (AXS), Monpellier Re (MRH).

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[GreenAB:]

a small company that benefits from fewer hurricanes is TCHC.
The Company, through its subsidiaries, underwrites standard and non-standard personal automobile insurance, flood insurance, general liability insurance, mobile home insurance and homeowners' property and casualty insurance in the State of Florida.
they did very well during the last years until their earnings got crushed by hurricanes.
with increased premiums and halfway through the hurricane season 2006 earnings should get a bosst.
stock is nearing an alltime high.

2006 Oct 03 02:32 AM