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We recently published a list of 5 Stocks Negatively Impacted By The LA Wildfires. In this article, we are going to take a look at where Arch Capital Group Ltd. (NASDAQ:ACGL) stands against other stocks negatively impacted by the LA wildfires.
According to a recent estimate by Goldman Sachs, losses to insurance companies resulting from the Los Angeles wildfires could be as high as $30 billion. Consequently, many insurance stocks, particularly property and casualty insurance companies, have been trading down or sideways since the fires started. Utility companies in the area are also struggling to figure out the extent of the damages as well as their future prospects in the region.
Even today, a large portion of the fire remains uncontrolled, left at the mercy of the strong LA winds to determine the direction in which it will spread. Insurance companies will not only have to settle claims quickly but are also uncertain how much more the fires will spread. We looked at the companies that are negatively impacted by these events and whose stock is feeling the heat from the fires.
To come up with the 5 stocks that are negatively impacted by the LA wildfires, we only considered companies with a market cap of at least $10 billion.
A close-up image of an insurance policy with hands standing firmly on top, conveying security.
Arch Capital Group Ltd. (NASDAQ:ACGL)
Arch Capital Group Ltd. (NASDAQ:ACGL), is an insurance, mortgage insurance, and reinsurance provider operating worldwide. It is a specialty insurance and reinsurance company with a current market value of $35 billion. Recently Arch Capital Group's (NASDAQ:ACGL) stock price dropped due to the ongoing Los Angeles wildfires.
Analyst Jimmy Bhular stated in a note that most insured losses will be borne by homeowners’ coverage and fewer will be borne by commercial. Since the company engages mainly in the commercial sector, it might be a manageable loss for the company. The stock has ended green on both trading days this week.
Keeping in mind the company’s strong growth history in the industry, the recent price decline can be taken as an opportunity to start building a position in the stock for post-crisis gains.
Overall, ACGL ranks 3rd on our list of stocks negatively impacted by the LA wildfires. While we acknowledge the potential of ACGL as a leading investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is as promising as ACGL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.