Image source: Flickr userJames Loesch.
Shares of Universal Insurance Holdings, Inc. (NYSE: UVE) are rising by about 15% as of 11:30 a.m. EDT as investors lower their expectations for insurance losses resulting from Hurricane Matthew.
Universal Insurance Holdings is highly concentrated in Florida, where it is the largest private personal residential insurance company by premiums. Policies in Florida made up 91.4% of its written premiums in the first six months of 2016.
Hurricane Matthew was expected to create significant losses for homeowners insurers in Florida and along the Southeastern United States. Universal Insurance Holdings sent out a press release in an apparent attempt to calm investors on Thursday, noting that it had reinsurance that would kick in after the first $35 million in losses in Florida and after the first $5 million in other southern states.
Shares were pummeled in trading on Thursday, as Hurricane Matthew was upgraded to a Category 4 storm.
The storm is now about 95 miles southeast of Jacksonville, Florida, and has been downgraded to a Category 3 storm. The National Weather Service expects it to gradually weaken as it travels north up the Atlantic coast to brush Georgia, South Carolina, and North Carolina.
Due to its geographic concentration, Universal Insurance Holdings will remain Wall Street's favorite way to wager on hurricane-related losses. For today, at least, expectations of losses are clearly much lower than when the storm was upgraded on Thursday.
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