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Berkshire Hathaway stands to profit off hurricane season
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Warren Buffett's Berkshire Hathaway stands to profit off the upcoming hurricane season, The Wall Street Journal reports today.
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Insurers such as Berkshire suffer short-term losses on existing policies after storms hit. But that allows the insurers to raise premiums, leading to bigger profits down the road.
As the Journal notes, only those insurers with strong capital bases can write new policies. The current state of the credit markets has made it harder to raise new capital, and companies with depressed stock prices don't want to sell additional shares.
The Journal argues that deep-pocketed insurers such as Berkshire, Travelers, Chubb and Munich Re stand to benefit should Mother Nature further deplete the capital bases of less-solid competitors.
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