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An Examination of Insurer Share Price Behavior Surrounding Superstorm Sandy

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  • Partha Gangopadhyay
  • Joseph D. Haley
  • Li Zhang

Abstract

Superstorm Sandy, the second costliest disaster in U.S. history at the time of its occurrence, hit the east coast of the U.S. during a full moon, two nights before Halloween, in 2012. The financial markets in New York City were closed for two days, plus a weekend, while Sandy delivered destruction across a wide geographic area. This paper focuses on property insurers with exposures in New York, New Jersey, and Connecticut, the three most affected states. Our event study analysis shows strong evidence of negative abnormal returns to the share prices of these exposed insurers in the days after Sandy struck. The incidence of the negative returns are closely linked to the news reporting on Sandy. The analysis also reveals that investors recognize the importance of the degree of an insurer’s exposure to the areas affected by Superstorm Sandy.

Suggested Citation

  • Partha Gangopadhyay & Joseph D. Haley & Li Zhang, 2019. "An Examination of Insurer Share Price Behavior Surrounding Superstorm Sandy," Journal of Insurance Issues, Western Risk and Insurance Association, vol. 42(2), pages 103-118.
    • Handle: RePEc:wri:journl:v:42:y:2019:i:2:p:103-118
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