Investors anticipate that insurers will withstand the hurricanes in the U.S.

Nikolay Stoykov, Managing Partner at Alaric Securities on ‘Business Start’

The insurance industry in the U.S., and particularly in Florida, is well-capitalized and will manage to weather the claims following hurricanes Milton and Helene, which hit the state over the past two weeks. Milton made landfall in Florida on Thursday morning as a Category 3 hurricane, having weakened from a Category 5. The storm had a relatively mild impact on the valuations of U.S. insurance companies, commented Nikolay Stoykov, managing partner at Alaric Securities, on the “Business Start” show with host Hristo Nikolov.

The expected damages from Hurricane Milton are estimated at around $50-60 billion, but the highest projections, nearing $100 billion, are still possible. Contrary to expectations that this would be one of the most destructive storms in U.S. history, Stoykov said investors remain highly optimistic about insurance companies.

“Insurance premiums, especially in Florida, have risen significantly, and the potential losses for insurance companies are something they can absorb. Given that premiums have increased so much in Florida over the past two years, they were expected to decrease. There’s no such expectation at this point, which is also positive for insurance companies.”

Shares in the sector have risen by 26% this year, with a peak of 27%, meaning the market does not view the claims from Milton and Helene, nor from other storms that hit the U.S., as negative news, Stoykov explained. If the damages do not exceed $100 billion, no significant negative impact on the sector is expected.

He added that catastrophic bonds have also recorded a slight decline, but this is against a backdrop of nearly 20% growth this year.

See the potential effects on municipal bonds in Florida and the expected trends in oil prices over the coming months in the video.