Progressive shares fell this week as Category 4 Hurricane Helene made landfall, leaving billions of dollars of estimated insurance losses in its wake.
Shares of the insurance company tumbled from recent record highs this week as the storm churned toward the Florida Gulf Coast and made landfall Thursday, leaving dozens dead and destroying homes and businesses across several states.
The cost of the damage could be as high as $10 billion for private insurers, according to Chai Gohil, global insurance analyst at Neuberger Berman. Progressive shares closed at $252 a share on Friday, down 2.7% from the record high it hit Sept. 20.
Ohio-based Progressive issued a “catastrophe notice” for the storm Thursday which said its claims staff was “on alert” after the storm moved into more than 60 Florida counties and nearly two dozen Georgia counties.
Progressive is one of many insurance companies that has pulled back from Florida and other major markets in recent years, as more catastrophic storms and higher costs have increasingly threatened losses.
The company announced at the end of August it would no longer offer home insurance policies in the state of Texas due to a rise in weather-related disasters. The announcement came days after the company released its second-quarter results, which noted that 40% of the recorded losses for that period were in Texas.
“Changes in our estimate of our ultimate losses on catastrophes currently reserved, along with potential future catastrophes, could have a material impact on our financial condition, cash flows, or results of operations,” Progressive said in its second-quarter results.
Still, Progressive is up 58% for the year so far. The S&P 500, meanwhile, is around 20% higher.
Insurance companies can withstand a certain amount of loss and still yield big profits, said Meyer Shields, managing director at Keefe, Bruyette & Woods. It can be tricky to execute, however.
“If that risk can be priced appropriately, then that just means more dollars for the insurance company and they can maintain their profitability,” Shields said.