Market Overview

This Florida Insurance Stock Is Ripping Higher

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This Florida Insurance Stock Is Ripping Higher

Shares of Florida residential homeowners' insurance company Universal Insurance Holdings, Inc. (NYSE: UVE) are rebounding in a big way in early Friday trading, up 17.3 percent. Prior to Friday’s surge, Universal Insurance shares had plummeted 22.6 percent this week on fears about the impact of Hurricane Matthew.

On Thursday, Universal Insurance issued a press release addressing concerns about the company’s financial positioning ahead of the potentially devastating storm. The company clarified the details of its 2016–2017 reinsurance coverage.

“UPCIC has a net retention of $35 million per catastrophic event for losses incurred, in all states, up to a first event loss of $2.4 billion. In addition, under an excess catastrophic contract specifically covering risks located outside the state of Florida and intended to further reduce UPCIC’s $35 million net retention, UPCIC has obtained catastrophic coverage of $30 million in excess of $5 million covering certain loss occurrences, including hurricanes, in states outside of Florida,” the PR read.

Related Link: With Hurricane Matthew Picking Up Steam, Investors Are Piling Into This Generator Stock

Friday’s market reaction is likely in response to the company’s clarification and the fact that, while Hurricane Matthew is certainly slamming the Florida east coast, it doesn’t appear to be a worst-case scenario.

The second explanation is likely the primary concern for traders. Shares of Florida residential insurer HCI Group Inc (NYSE: HCI) are also up 14.31 percent on Friday.

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