Last Updated Sep 30, 2009 10:40 AM EDT
Bloomberg News has done a comprehensive job of explaining what's happening, and pinpointing the company that will profit the most by this good news: struggling American International Group. Others that will benefit include Allstate, Chubb and Travelers, all of whose primary focus is insuring homes and businesses.
Bloomberg also quotes an analyst with another intelligent point; property insurers, like other insurers, will benefit from the boost to the financial markets, which have soared in the past few months, defying another prediction: September is a traditionally down month.
So should everyone rush out and buy stock in property insurance carriers? Not hardly. By the time wire services run their stories at the end of the quarter, it's old news to savvy investors. AIG's shares, for example, had nearly quadrupled in value since the start of the quarter, although other reasons, such as speculation, possible initial public offerings and a new CEO contributed to the upturn.
Other insurers in this group have also benefited from the change in the weather. While the Standard & Poor's 500 Index has risen about 15 percent since the start of the quarter, the property/casualty insurance index has jumped 25 percent.
An old joke, often told by Morgan Stanley strategist Barton Biggs, was that when Business Week noticed a rally or a recession, it was already over. Let's hope that's not true for the insurers. But as any industry veteran will tell you, these companies tend to shoot themselves in the foot every time the market turns in their favor by launching price wars, fighting for unprofitable customers and forgetting that, sooner or later, another hurricane will happen.