5 Stocks to Avoid After Frankenstorm

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Hundreds of thousands, if not millions, of insurance claims will be filed because of Hurricane Sandy, and insurance companies will take a big hit as a result. So who will be most affected?

Berkshire Hathaway (NYSE: BRK-B ) , Allstate (NYSE: ALL ) , and Travelers (NYSE: TRV ) are the three top property and casualty underwriters in New York, so they will see a big impact. In the Northeast, we can bring AIG (NYSE: AIG ) and Chubb (NYSE: CB ) into the fold as top underwriters. With estimates likely to exceed $20 billion, these companies will be the big losers of Hurricane Sandy.

The impact won't be devastating, but it will hurt the bottom line, especially if damages increase as the days go on. Insurers have had a relatively light storm season, but this single Frankenstorm could change everything, even for Berkshire Hathaway this quarter.

See more in the following video.

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Fool contributor Travis Hoium owns shares of Berkshire Hathaway. The Motley Fool owns shares of AIG and Berkshire Hathaway and has options on AIG. Motley Fool newsletter services recommend American International Group and Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Report this Comment On October 31, 2012, at 12:00 AM, Shelly2884 wrote:

It's important to understand how insurance payouts work when considering the impacts of Sandy. First consider that Sandy was primarily a heavy rain storm not a violent wind storm, That is important because most damages are probably water damages and those are not covered by your normal insurance policy. Second, all policies have recently added a hurricane clause. That means that the deductible can be significantly greater then your traditional deductible. When you consider the two of these factors together, you should find that the homeowners will carry the majority of the cost for repair and not the insurance companies. Remember all the flooding we have all be hearing about are not covered items unless you had a separate flood policy which also is not the risk of the insurance companies.

updated 1 day ago Sponsored by:
	DOW	15,303.10	8.60	0.06%
	S&P 500	1,649.60	-0.91	-0.06%
	NASD	3,459.14	-0.28	-0.01%

CB	$88.02		+0.20	+0.23%
The Chubb Corp		CAPS Rating:

TRV	$83.60		+0.10	+0.12%
The Travelers Comp…		CAPS Rating:

BRK-B	$110.83		-0.46	-0.41%
Berkshire Hathaway		CAPS Rating:

AIG	$44.69		+0.16	+0.36%
American Internati…		CAPS Rating:

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5 Stocks to Avoid After Frankenstorm

Don't let it get away!

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Report this Comment On October 31, 2012, at 12:00 AM, Shelly2884 wrote:

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