Trades with cats wrote:If these fires burn up Bel Aire and the nearby very pricy areas this could possibly be the coup de gras for some property insurance firms?
KIE:XLF is at a 20day low area.. but the ratio is actually up on the day.
Point of fact: property insurance firms don't experience a sudden "coup de gras". They cap at a certain level, and pass the rest on to re-insurers. These "re-insurance" companies are huge pools of last-ditch reserve capital. If any one of
these entities fails it takes down the whole system with it.
But until that happens the front line companies have much shock-absorption.
And much of this is probably already priced in for the ratio to already be in a 20day low region... but if one is serious about deep-diving into the sub-sector, it would be best to carefully track several key re-insurers, looking for technical chart warnings.