Shares of power generation company Generac Holdings surged more than 7% on Monday as Hurricane Milton rapidly intensified into a Category 5 storm, sparking concerns over potential power outages in the storm’s path.
Hurricane Milton, which is forecast to move north of the Yucatan Peninsula and cross the Gulf of Mexico, is expected to approach Florida’s west coast by Wednesday. Tampa Bay could face a storm surge between 8 and 12 feet, according to the National Hurricane Center.
Generac’s stock reached an intraday high of $174.08, up about 8.7% from Friday’s close, marking a new 52-week high. The company, which specializes in backup power generation, stands to benefit from the increased demand for generators during severe weather events like Hurricane Milton.
Meanwhile, insurance stocks with exposure to weather-related catastrophes experienced significant declines. Companies such as Allstate, Travelers, and Chubb saw their shares drop more than 3%, while Progressive and AIG fell over 1%. Universal Insurance, based in Fort Lauderdale, Florida, saw a dramatic plunge of more than 15% as concerns over heightened hurricane risks in the Gulf Coast region weighed on its stock.
Joshua Shanker, a research analyst at Bank of America, noted that property and casualty insurance companies, particularly those involved in underwriting and reinsurance, may face significant pressure on their fourth-quarter earnings. The potential for widespread insured losses due to Hurricane Milton could further exacerbate financial challenges for these firms.
The storm follows the devastation of Hurricane Helene, which claimed over 220 lives and caused significant destruction, particularly in North Carolina. Experts have warned of an “extremely active Atlantic hurricane season” this year, driven by warm sea surface temperatures that fuel hurricane development, according to Colorado State University Tropical Weather and Climate Research.
Related topics: