Joseph Theuns, CFA at Autonomous, examines one of the most common assumptions in insurance investing: that the Atlantic hurricane season consistently weighs on reinsurer and London Market insurer share prices.
Instead, he finds that pricing cycles, diversification strategies, and broader sector dynamics hold far greater sway over long-term performance.
Theuns’ analysis of 33 hurricane landfalls since 2005 highlights how limited the market impact has been.
On average, both reinsurers and London Market insurers outperformed broader benchmarks in the month following landfall.
Even catastrophic events such as Hurricanes Katrina, Rita and Wilma in 2005 or Hurricane Ian in 2022 generated sharp but short-lived sell-offs rather than persistent losses. For Autonomous, the data makes clear that the real driver of share prices is not the storm count, but the structural position of each company and the stage of the underwriting cycle.
Autonomous research also demonstrates that location matters more than storm strength, and even then, market effects quickly fade. Company-level reactions vary but remain bounded within a narrow range, with no evidence of systemic drawdowns directly tied to hurricanes.
This conclusion is reinforced by broader catastrophe events: the Tohoku Earthquake in 2011 and Hurricane Sandy in 2012 triggered volatility but did not derail the sector’s long-term returns.
Autonomous places far greater weight on the pricing cycle as the determinant of outcomes. Reinsurers consistently deliver their strongest results in hard markets, particularly the German players, while London Market insurers often defy expectations by thriving in soft cycles. Beazley, Hiscox, and Lancashire feature prominently in Theuns’ work as examples of firms that have outperformed in years where pricing conditions were widely thought to be a headwind.
Seasonal trading patterns are also re-examined by the Autonomous team. The traditional “winter trade” following hurricane season, often cited by market participants, is shown to rest on a handful of exceptional years.
By contrast, a far more consistent pattern emerges in the second quarter, when outperformance has occurred in 14 of the past 15 years. They highlight this “spring trade” as a more reliable seasonal phenomenon than the much-discussed hurricane-related rebound.
Across all strands of his research, Theuns emphasises that investors overstate the link between hurricanes and equity performance. Headlines may amplify the drama of landfall events, but Autonomous data shows that the sector’s resilience lies in capital strength, underwriting discipline, and cycle positioning rather than in luck with the weather.
Over the past fifteen years, reinsurers and London Market insurers have ranked among the most successful subsectors within European financials—despite multiple active storm seasons and record-breaking insured losses.
By anchoring analysis in evidence rather than assumption, Autonomous provides investors with a sharper framework: hurricane season may bring noise, but it is not the determinant of performance.
Pricing power, diversification, and disciplined underwriting—these are the forces that have repeatedly delivered returns, a point underlined by Autonomous’ long-term tracking of the sector. For investors, the real risk is not the weather system on the horizon, but the habit of misjudging what truly moves the market.
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