Reinsurance Stocks Underperform During Hurricane Season: What’s The Play?

With 2015’s hurricane season now in full swing, Citi Research analyst Andrius Budnikas penned a new report on hurricane season’s effect on the reinsurance business. U.S. hurricanes have historically caused some of the largest financial losses to the reinsurance business, and reinsurance stocks typically underperform throughout the hurricane season.

Risk Level

Budnikas explains that reinsurance stocks have historically lagged in both absolute terms and versus the insurance sector throughout hurricane season. However, he believes that both American and European reinsurers’ current levels of risk and exposure do not warrant solvency or ordinary dividend concerns, even in the event of a catastrophic storm.

Pricing Levels

According to Budnikas, the global reinsurance market is currently…

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