Hurricanes found to risk long-term company value

Dozens of large publicly-traded companies whose annual statements reported hurricane-related financial damage collectively lost 5% of their shareholder value over the year following the storms. This is according to an FM Global-commissioned study of the direct impact of hurricane damage on shareholder value – offering unique insight into property risk prevention.

A related dataset shows that property protection and risk engineering advice is proven to reap dividends; FM Global clients fared better in shareholder value terms when they followed advice relating to storm protection -- collectively outperforming those that had not by a not insignificant 10%.

“The lessons are clear,” said Deborah Pretty – a well-known expert on shareholder value analysis and founding director of Pentland Analytics. “First, hurricanes damage shareholder value as well as property values. Second, property protection pays off.”

To draw these conclusions, Pentland Analytics modelled the stock prices of 52 US-based companies reporting financial damage from hurricanes Harvey, Irma or Maria. They collectively lost US$18bn in market value by August 2018 stemming from a collective 5% hit to shareholder value. The loss-prevention element was based on data from 109 insureds with significant property assets in those hurricane-affected regions.

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