Market briefing---Mike (fast)
>> let’s get to the rest of the numbers on the day now. the new york stock exchange finishing lower on the day by about a point. amex down almost three points. russell 2000 small caps finishing almost 1 1/2 points lower. wilshire 5000 index down by almost 12 points on the day. crude oil fell to a one-month low after u.s. crude oil and heating oil supplies rose to the highest level in more than a year. crude down 1.5% at $28.47 a barrel at the close of floor trading. bonds were lower today with the 10-year down about 3/8. same for the five-year. on the shorter end of the curve, a loss of 1/8 for the two and three-year notes. wildfires in southern california have consumed an area the size of rhode island, destroying more than 2,500 homes. investigators are now trying to figure out how much the fires will cost the insurance industry
>> that’s right, mike. right now california officials blame the fires for more than $2 billion in damages and lost business. and while another $8 billion in property is under threat, analysts say insurers will only be liable for part of the total losses.
>> given the ongoing events we believe it will be closer to the 1991 event in oakland which was $2 billion, $2.5 billion worth of insured value.
>> standard & poors says six insurance companies will incur “virtually all” the exposure. those are all state, farmers insurance, nationwide, safeco, state farm and usaa. s&p doesn’t expect the fires to hurt those company credit ratings. disasters like these are expected in the insurance industry.
>> keeping in mind mostly insurance analysts assume some normal catastrophe tpeus in their model. of losses associated with natural catastrophe tpeus. as long as the losses remain within the parameter, the companies will have no problems making the numbers.
>> investors agree. george foley says the industry spreads its risk well. while the fires are a disaster for victims, i don’t think they’ll impact insurer numbers. the days of a company getting wiped out from a storm are over. analysts also say it’s important to remember that natural disasters can actually benefit the insurance industry.
>> sometimes in the insurance pricing, natural catastrophes are a good thing. they give a reason for insurance companies to keep the rates high. i’m not suggesting anybody to be selling any insurance companies because of these fires, not quite yet.
>> ken shapiro says overall insurance premiums are up 12% from last year. that means the industry has cushion for catastrophes like this one. since the fires began, all state and chubb are close to unchanged. safeco shares are up 9%. that’s it for now. back to you.
>> coming up at 4:47 new york time, we’ll talk more about the fire situation and what it means for insurance stocks . our guest, jeff thompson. aetna stock is in the red today after this country’s second largest health insurer
