Shares of Chubb Ltd (CB) are taking a hit, falling 5% to $275.89 on Monday as Hurricane Milton intensifies and sets its sights on Florida’s Gulf Coast. The insurance industry is feeling the pressure as Floridians brace for another major hurricane, just weeks after Hurricane Helene caused significant damage in the state.
Chubb, a global leader in property and casualty insurance, is facing heightened risk from these powerful storms. Florida is a key market for Chubb’s homeowner and commercial property insurance business, and the potential damage from Hurricane Milton, which is expected to be a Category 4 or 5 storm, could lead to a significant surge in claims. The combined impact of Helene and Milton could significantly impact Chubb’s profitability in the fourth quarter.
While Hurricane Helene caused significant but manageable damage, leading to initial relief among insurers, the threat posed by Milton is raising alarm bells. Meteorologists predict that Milton will affect a broader geographic area, particularly the Tampa Bay region, and the storm’s size and intensity suggest a higher level of destruction, including wind damage, flooding, and business disruptions. Given Chubb’s comprehensive hurricane coverage, the company could face hundreds of millions of dollars in claims.
Chubb is known for its financial resilience, with robust reinsurance arrangements and substantial capital reserves to manage catastrophic events. However, consecutive hurricanes of this magnitude could put pressure on its underwriting performance and result in larger-than-anticipated payouts, potentially hurting its combined ratio, a key measure of profitability in the insurance industry.
If Milton causes extensive infrastructure damage, Chubb could see a higher volume of claims than initially forecast. Adding to the pressure, the cost of handling claims, such as deploying adjusters and addressing policyholder needs in hard-hit areas, can inflate Chubb’s expenses. Given the already strained resources from Hurricane Helene, the added burden from Milton raises fears of longer recovery timelines and potentially larger economic losses.
Investors are understandably cautious as Chubb’s exposure to natural disasters remains a key risk to the company’s financial outlook. While home improvement and utility stocks may see gains due to increased demand for repairs and backup energy systems, Chubb and other insurers are vulnerable to unexpected, substantial losses from back-to-back hurricanes.
How to Invest in Chubb (CB) Stock
If you’re interested in investing in Chubb, you can typically buy shares through a brokerage account. You can find a list of possible trading platforms online. Many brokerages allow you to buy ‘fractional shares’, which lets you own portions of stock without buying an entire share. For example, some stocks, like Berkshire Hathaway, can cost thousands of dollars for a single share. Brokerages allow you to invest smaller amounts in these stocks by buying fractional shares.
If you’re looking to bet against Chubb, the process is more complex. You’ll need access to an options trading platform or a broker who will allow you to ‘go short’ a share of stock by lending you the shares to sell. You can find information on how to short a stock online. Alternatively, if your broker allows you to trade options, you can either buy a put option or sell a call option at a strike price above where shares are currently trading. Both strategies allow you to profit if the share price declines.
According to data from Benzinga Pro, CB has a 52-week high of $294.18 and a 52-week low of $205.64.
