Research looks into the long term impacts of hurricane damage on company value
- Published: Friday, 20 September 2019 08:41
When it comes to hurricane impacts, well-prepared companies preserve their value, and poorly prepared companies may not do so; this was the headline finding of a study commissioned by FM Global and conducted by Pentland Analytics. The study found that hurricane damage links to a loss in shareholder value and, conversely, property protection to value preservation.
Research for the study expanded on FM Global’s whitepaper ‘Master the Disaster: Why CFOs Must Initiate Natural Catastrophe Preparedness in 2019 and Beyond’. Dozens of large publicly traded companies that reported hurricane-related financial damage to the U. Securities and Exchange Commission in their 10-K annual statements collectively lost 5 percent of their shareholder value over the year following the storms.
A separate dataset shows that FM Global clients fared better in shareholder value terms when they followed the insurer’s property protection advice prior to those same hurricanes. Companies that followed all of the insurer’s engineering advice relating to storm protection collectively outperformed clients that hadn’t by 10 percent.
“The lessons are clear,” said Deborah Pretty, founding director of Pentland Analytics. “First, hurricanes damage shareholder value as well as property values. Second, property protection pays off.”