Investing.com - Wednesday was a volatile session for the shares of major property and casualty companies, which first plunged as Hurricane Irma approached Florida, but later regrouped following a bullish note from Morgan Stanley (NYSE:MS)
The likes of Renaissancere Holdings Ltd (NYSE:RNR), Everest Re Group Ltd (NYSE:RE), Axis Capital Holdings Limited (NYSE:AXS), and XL Group Ltd (NYSE:XL) have plunged in recent weeks as Hurricane Harvey hit the U.S. Gulf Coast, causing billions of dollars worth of damages. They were initially lower on Wednesday as Hurricane Irma, one of the largest storms to ever form in the Atlantic, headed toward Florida. But, the losses were limited and shares turned higher after Morgan Stanley said reinsurance stocks are pricing in the kind of loss that happens once every century, and that the industry balance sheet should be able to withstand such a catastrophic scenario.
Morgan Stanley also noted that historically, these stocks tend to underperform immediately following major losses, and then outperform after losses become certain and investors' focus shifts to stabilizing & improving pricing.