Will Hurricane Irene cost the United States $10 billion? $15 billion? Or even more? It really depends upon whom you speak with on this front. The expected damage count is growing now that the hurricane path looks far more definite since it is closer and closer to landfall. One thing is almost certain… The damage is expected to be big and it is going to hit areas of the country which usually are not as badly affected by summer weather. This will be one weekend to remember on the Eastern Seaboard. We have pulled some economic data and put together some of the likely winners and losers as far as companies are concerned from this storm and its aftermath.
UBS has issued a brief report that hurricanes tend to have little impact on GDP and on Federal Reserve policy, but one notion that they do influence is employment. The observation is that companies in hurricane areas tend to push out their new hiring decisions by about a month.
We wanted to take a look at just some of the companies in each sector that would win and lose from the aftermath of Hurricane Irene. You can imagine that insurance companies are going to be hit by damage claims, but what about power, water, and telecom? And imagine the construction and rebuilding business. And the building supplies and service providers.
Allstate Corporation (NYSE: ALL) and The Travelers Companies, Inc. (NYSE: TRV) have exposure in the areas around North Carolina. That is where the landfall is expected first. Perhaps more worrisome is the upper Eastern Seaboard where Hurricane Irene is expected to strafe this weekend. The Chubb Corporation (NYSE: CB) has exposure in New York and on north throughout southern New England, as does Allstate and Travelers. Chubb noted on its site, “Hurricane Irene Alert: Chubb is helping its customers prepare for the storm.” Allstate also has a claim and preparedness site.
Berkshire Hathaway Inc. (NYSE: BRK-A) is also likely not immune as Mr. Buffett has joked in the past that he was lucky enough to avoid hurricanes for two straight years.
Duke Energy Corporation (NYSE: DUK) spoke on CNBC this morning saying that while they do expect damage that they have their staff ready to go to assist in the region. Power lines and power equipments tend to not do well in floods, 100 mile an hour wind, lightning, and with flying debris. Dominion Resources Inc. (NYSE: D) saw a brief outage at a nuclear plant this week due to the earthquake, but it has already said that its Virginia and North Caroline units are preparing for the aftermath. Entergy Corporation (NYSE: ETR) has the often controversial Indian Point nuclear power plant located about 35 miles the middle of Manhattan.
This could have an impact on American Water Works Company, Inc. (NYSE: AWK) as well, even though this company is very diversified throughout parts of America. The New Jersey based water utility has operations at risk in North Carolina, Virginia, Maryland, Pennsylvania, New York, New Jersey, Connecticut, Rhode Island, and Massachusetts.
Verizon Communications Inc. (NYSE: VZ) is also diversified all over the United States, particularly on wireless. That being said, it has real land line and phone line exposure throughout much of the projected areas in New York and the Northeast as the former Bell Atlantic.