Hurricane Ian is just off the Gulf Coast of Florida and approaching landfall near Cape Coral as a Category 4 storm with maximum sustained winds of 155 miles per hour.
On Wednesday, several Wall Street analysts said it's still too soon to project the potential impact Ian will have on insurance and reinsurance stocks.
Reinsurance Stocks: Bank of America (NYSE:BAC) analyst Joshua Shanker said investors will get a clearer picture of the damage from Ian in the next 48 hours.
Ian could be a significant catalyst for reinsurance stocks, including Arch Capital Group Ltd. (NASDAQ: ACGL), AXIS Capital Holdings Ltd (NYSE: AXS), Everest Re Group Ltd (NYSE: RE) and RenaissanceRe Holdings Ltd . (NYSE: NYSE:RNR), the analyst said.
"It is not unreasonable to expect reinsurers like Everest Re or RenaissanceRe to have 2-3% market share of a major event, while Arch and AXIS’s market shares are likely closer to 1%," Shanker said.
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At this point, Shanker recommends Buy-rated ArchCapital, Axis Capital and RenaissanceRE over Underperform-rated EverestRe. Shanker also warned investors that Ian may not be the last storm of the season given that hurricane season could extend through October.
Keefe, Bruyette & Woods analyst Meyer Shields said there may be a silver lining to Ian for reinsurance companies.
"Notwithstanding uncertainty over Hurricane Ian's size and impact, we think large catastrophe losses should provide more property-catastrophe reinsurance pricing momentum," Shields said.
Related Link: Amazon (NASDAQ:AMZN) Temporarily Closes Some Warehouses In Florida Due To Hurricane Ian
Florida Banks: Raymond James bank analyst David Feaster took a close look at which public bank stocks have the most exposure to the Florida counties most likely to be impacted by Ian.
Feaster said US Century Bank (NASDAQ: USCB) is the most exposed bank in his coverage, with virtually all of its deposits in the at-risk area. Amerant Bancorp Inc (NASDAQ: AMTB) and Seacoast Banking Corporation of Florida (NASDAQ: SBCF) each have more than 85% of their deposits in the impacted counties.
"While we do suspect some provision and credit deterioration could materialize, we believe these issues will prove to be very manageable for the banks," Feaster said.
Benzinga's Take: Hurricane Ian is large and strong, and it is making landfall in a heavily populated coastal region of South Florida, suggesting it could do significant damage. More than 200,000 Florida residents have already lost power, and Ian is not expected to make landfall until Wednesday afternoon.
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