Insurance stocks were among the biggest decliners in the S&P 500 Index as investors weighed the impact of home and auto damages tied to Hurricane Harvey, which hit Texas as a Category 4 storm over the weekend.
Travelers Cos. dropped 2.9 percent, the third-biggest drop in the benchmark index, and Progressive Corp. slipped 2.6 percent at 10:08 a.m. in New York.
Harvey is expected to cause as much as $30 billion in damages, according to an early estimate from Chuck Watson of Enki Research. He said about two-thirds of that sum won’t be covered by insurers because much of it was caused by flooding, which is backstopped by the U.S. government. State Farm Mutual Automobile Insurance Co., which isn’t publicly traded, has the largest share in the market for home coverage in Texas, followed by Allstate Corp.
“The greatest risk for insurers would likely be from windstorm damage and storm surge rather than flooding from heavy rain,” Barclays Plc analysts led by Jay Gelb said Monday in a note to clients. “We tend to view homeowners’ insurers as having the most exposure in a hurricane, although private market homeowners’ insurance does not typically cover losses from flooding.”
Allstate dropped 1.6 percent, while XL Group Ltd. fell 3.2 percent.