Warren Buffett expects Hurricane Harvey to hit car insurer and wholly owned Berkshire Hathaway (BRKB)-unit Geico harder than Hurricane Irma, given the massive floods that accompanied the former storm.
Geico is the No. 2 insurer in Texas, where Harvey struck in August. That storm, in contrast to Irma which pounded Florida earlier this month, was primarily a flooding event. Water can be more damaging to cars than wind.
"It's very hard to give numbers but ... there were more total losses by quite a margin in Harvey than in Irma," Buffett, the chairman and CEO of Berkshire, told The Wall Street Journal Tuesday about Geico's business.
In August, Buffett had said he expects Geico to report losses on about 50,000 cars following Harvey.
As the No. 1 insurer in Florida, Geico will hardly be unscathed by Irma though. Irma was more like a typical hurricane, causing heavy wind damage.
"Auto insurance claims from this storm are also expected to be significant, and we expect Berkshire Hathaway's Geico unit to have the largest exposure, based on its nearly 26% share of the Florida auto insurance (physical damage) market," Cathy Seifert, an insurance analyst with CFRA Reasearch, wrote in a recent note.
Progressive (PGR) is the third largest car insurer in Florida, with a roughly 14% market share, while Allstate Corp. (ALL) is No. 4, with 10%, she added.
IBD'S TAKE: This mortgage insurer, a hot growth stock on the IBD 50 list, has racked strong profits and is showing favorable technical traits. Will recent hurricanes damage its performance?
Shares of Berkshire rose 0.4% to 183.82 on the stock market today, hitting a new all-time high intraday.
Berkshire stock advanced 6% since a late July breakout from a saucer-with-handle base with a 172.80 buy point. Berkshire is now in a follow-on buy area due to support at its 50-day moving average.
Progressive rose 0.15% to 47.70 while Allstate added 0.2% to 91.35. Allstate is working on a new consolidation with a 95.35 buy point.
Buffett spoke to the media at an event celebrating Forbes' centennial Tuesday night in New York.
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