When Winter Garden retiree Sue Maher received a letter informing her that her homeowners insurance premium was going up by $2,000, she couldn’t help but feel alarmed. Already paying $3,800 annually, the sudden increase was hard to swallow. This is a situation many Floridians find themselves in.
Over the past three years, the average homeowners insurance premium in Florida has risen by 100%. In fact, it now stands at around $6,000, which is more than triple the national average, according to the Insurance Information Institute. If trends continue, experts predict that average premiums in Florida could reach $9,000 next year. For properties located near the coastline, insurance costs can easily surpass $100,000.
The sky-high insurance costs in Florida can be attributed to climate change and the litigious environment in the state. Insurers face significant expenses due to these factors, and it has become so burdensome that Farmers Insurance, one of the largest property and casualty insurers in the US, has decided to withdraw from the market.
Although state lawmakers passed legislation in December to address the issue and reduce the number of lawsuits, it may take quite some time before the benefits are apparent. With thousands of cases still pending, analysts estimate that it could take 18 months or even longer to see any significant changes. In the meantime, the risks associated with climate change continue to loom ominously. Florida’s waters have been breaking temperature records, and some meteorologists have even revised their forecasts to predict above-average hurricane activity for this year. If another bad storm year occurs, insurance rates could skyrocket even further, more carriers may exit the market, and small carriers could face insolvency.
Last Week’s Market Highlights
Consumer confidence is nearing pre-pandemic levels, home prices are on the rise, and UPS managed to avoid a strike. The Federal Reserve raised rates by another quarter point, as anticipated, causing stocks to soar. In fact, the Dow industrials experienced its 13th consecutive session of gains. However, the good news was tempered by the announcement that second-quarter GDP had only risen to 2.4%, disappointing investors and bringing an end to the winning streak. Throughout the week, the Dow Jones Industrial Average rose by 0.66%, the S&P 500 by 1%, and the Nasdaq Composite by 2%.
Adjusted for the CPI
Hurricanes hitting Florida
Alphabet and Microsoft Exceed Expectations in Q2
Both Alphabet and Microsoft have reported strong second-quarter results, surpassing expectations. The tech giants also announced plans for increased investment in the field of artificial intelligence. On the other hand, Snap experienced a significant decline in sales, while Meta Platforms succeeded in boosting ad sales. General Electric and Coca-Cola also beat expectations in their respective sectors.
Elon Musk Makes Changes at Twitter
Elon Musk, the entrepreneur behind Tesla, has stirred things up on Twitter by replacing the platform’s iconic blue bird logo with a simple “X.” This move suggests that Musk has plans to expand beyond just tweeting.
Banc of California Acquires PacWest Bancorp
In a notable deal worth over $1 billion, Banc of California has agreed to acquire PacWest Bancorp. The financial deal has attracted the attention of investors, with Warburg Pincus and Centerbridge pledging to invest $400 million into the transaction. However, the Committee on Foreign Investment in the U.S. is currently reviewing Mubadala’s $3 billion takeover of Fortress Investment Group due to concerns regarding its ties with China.
Biogen Acquires Reata Pharmaceuticals
Biotech company Biogen has announced its plans to acquire Reata Pharmaceuticals for a premium of 59%. The deal, valued at $7.3 billion, shows Biogen’s commitment to expanding its portfolio and market presence.
Next Week – Tuesday 8/1
Large-cap Pharmaceutical Companies Report Results
Merck and Pfizer are set to release their second-quater results, leading a group of prominent pharmaceutical and healthcare companies. Investors will also be eagerly awaiting announcements from Vertex Pharmaceuticals, CVS Health, and Humana throughout the week. On Thursday, Amgen, Gilead Sciences, and Regeneron Pharmaceuticals will be rounding out the week with their own respective reports.
The BLS Releases Job Openings and Labor Turnover Survey
The Bureau of Labor Statistics (BLS) is set to release the Job Openings and Labor Turnover Survey for June. Economists estimate that there will be approximately 9.7 million job openings on the last business day of June, slightly lower than the previous month. Federal Reserve Chairman Jerome Powell has recently reiterated that the demand for labor far exceeds the available workforce.
Amazon.com and Apple Announce Earnings
After the market closes, Amazon.com and Apple are expected to release their second-quarter earnings reports. Both companies have experienced significant growth this year, with their stock prices rising by over 50%. Apple recently hit a record high in terms of market capitalization.
The BLS Releases July Jobs Report
Economists anticipate that the Bureau of Labor Statistics will report a gain of 200,000 nonfarm payrolls for the month of July, which is slightly lower than the previous month. The unemployment rate is expected to remain unchanged at a historically low level of 3.6%.