Investors are ditching insurance stocks as Hurricane Irma pounds the Caribbean, even though industry leaders say companies will be able to handle the financial impact.
"There is an abundance of capital," said Steve Bowen, chief meteorologist at Aon, one of the few insurers whose shares haven't taken a beating during hurricane season. "The industry should be able to absorb the losses from not just what Irma ends up causing, but what we saw last week from Hurricane Harvey."
In numerous interviews over the past several days, principals across the industry are offering assurances that, given the uncertainty of the storm's path and the unknown amount of damage it will cause, companies are well-capitalized and will be able to meet their requirements.
Nevertheless, investors are heading for the exits.
The SPDR S&P Insurance exchange-traded fund dropped nearly 2 percent in trading Thursday that added to a 4 percent slide since Hurricane Harvey hit in late August. Individual names fared even worse.
Aspen Insurance Holdings has tumbled 15 percent over the past week while Everest Re and Validus both fell about 11 percent. Aon shares are actually up fractionally during the period, one of only four holdings in the insurance ETF to not suffer losses.
Given Irma's Category 4 status, investor jitters are to be expected. Credit Suisse already has estimated that the insured losses could hit $125 billion or more, making Irma easily the costliest hurricane in U.S. history.