Energy
Monday, October 7th, 2024 4:52 pm EDT
Key Points
- Surge in Generac Holdings Stock: Shares of Generac Holdings, a backup power generation company, increased over 7% on Monday, reaching an intraday high of $174.08, as Hurricane Milton intensified into a Category 5 storm, with the potential for significant power outages.
- Hurricane Milton’s Impact: The storm is expected to move north of the Yucatan Peninsula and approach the west coast of Florida by Wednesday, with forecasters predicting a storm surge of 8 to 12 feet in Tampa Bay, raising concerns about further devastation similar to that caused by Hurricane Helene, which resulted in over 220 fatalities.
- Insurance Sector Decline: In contrast to Generac’s rise, insurance stocks, including Allstate and Travelers, fell due to anticipated insured losses from Hurricane Milton. Analysts predict that the storm could negatively impact the fourth-quarter earnings of property and casualty insurance companies, with Universal Insurance experiencing a significant drop of over 15%.
Shares of Generac Holdings, a backup power generation company, experienced a notable surge of over 7% on Monday, driven by the rapid intensification of Hurricane Milton into a Category 5 storm. As the storm approaches, it is projected to move north of the Yucatan Peninsula on Monday and Tuesday, subsequently crossing the Gulf of Mexico to potentially impact the west coast of Florida by Wednesday. The National Hurricane Center has warned that Tampa Bay could experience a significant storm surge ranging from eight to twelve feet, raising concerns about power outages and the demand for backup generators.
Generac’s stock hit an intraday high of $174.08, representing an 8.7% increase from Friday’s closing price, and marked a new 52-week high for the company. This positive performance stands in stark contrast to the broader insurance sector, which has seen declines in stock prices due to fears of potential insured losses associated with Hurricane Milton. Major insurance companies, including Allstate, Travelers, and Chubb, experienced drops of over 3% in their share prices, while Progressive and AIG fell by more than 1%. Universal Insurance, which operates in Fort Lauderdale and is particularly vulnerable to hurricane risks, saw its stock plummet by over 15% in response to heightened concerns about the storm.
Analysts from Bank of America have indicated that the shares of property and casualty insurance underwriters and reinsurers are likely to face pressure as Hurricane Milton could lead to a significant reduction in their fourth-quarter earnings. The impact of this storm follows the devastation caused by Hurricane Helene, which resulted in over 220 fatalities and extensive destruction across the Southeast, especially in North Carolina.
This year has been characterized by forecasts of an “extremely active Atlantic hurricane season,” largely attributed to unusually warm sea surface temperatures that provide a favorable environment for hurricane formation. Colorado State University’s Tropical Weather and Climate Research has noted these conditions as a critical factor in the increasing frequency and intensity of storms, underscoring the challenges faced by both power generation companies and insurers in navigating the impacts of severe weather events. As the situation develops, both Generac and the insurance industry will be closely monitored for their respective responses to the storm’s fallout.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/10/07/generator-maker-generac-soars-insurance-stocks-fall-on-hurricane-milton.html
