💨 Home insurance storm

Plus: Lax audits | Thursday, September 29, 2022

Open in app View in browser   Presented By Equitybee   Axios Closer By Hope King and Nathan Bomey · Sep 29, 2022 Thursday ✅. Our thoughts are with those impacted by Hurricane Ian. Today's newsletter is 698 words, a 2½-minute read. 🔔 The dashboard: The S&P 500 closed down 2.1%. Biggest gainer? Everest Re Group (+3.1%), the insurance and reinsurance underwriter, as the storm season bodes well for strong reinsurance premiums. Biggest decliner? CarMax (-24.6%), the used auto dealer, after second-quarter earnings came in below expectations.     1 big thing: Ian's financial storm Illustration: Sarah Grillo/Axios   Hurricane Ian is expected to undermine the already precarious market for property insurance in Florida, Nathan writes. Why it matters: Ian's trail of wreckage will inevitably trigger a host of insurance claims by homeowners who have coverage, saddle others without flood coverage with devastating losses, further supercharge premiums, and bludgeon the strained finances of the state's insurers. Driving the news: Property losses from Ian are expected to amount to "one of the largest catastrophic loss events" in U.S. history, likely exceeding $30 billion, says Mark Friedlander, a Florida-based spokesperson for the Insurance Information Institute (III). "That's going to put extreme pressures on the already extremely volatile Florida insurance market," he tells Axios. Context: Florida homeowners already pay the highest average annual homeowners insurance premium at a cost of $4,231, more than 2.7x the nationwide average, according to the III. Even so, the state's property insurance market has been crumbling. Six local insurers have declared insolvency so far in 2022 and another 27 are on a state watchlist, according to the III. Meanwhile, most homeowners insurance policies don't cover flood damage, and only about 18%–20% in the state have separate flood coverage, according to the III. The impact: Ian is set to push premiums even higher. They were already up 33% in Florida in 2022, compared with 2021, Friedlander says. He says "it wouldn't surprise us" if the next round of increases tops 50%. State of play: The state-backed Citizens Property Insurance, which now accounts for about a tenth of homeowner insurance policies in Florida, anticipates being able to cover claims on its policies, Gov. Ron DeSantis said, according to AP. Go deeper.     2. Charted: Rite Aid investors need an Advil Data: Yahoo Finance; Chart: Axios Visuals Rite Aid's stock plummeted 28% today following a ghastly earnings report that called into question the company's strategy for keeping up with its bigger drugstore competitors, Nathan writes. Despite inflation fueling revenue gains for companies throughout the economy, Rite Aid's sales fell 3.5% in the second quarter. The drop was partly attributable to a reduction in revenue from COVID vaccines and testing, as well as store closures. Go deeper.     3. What's happening ✋ Facebook parent Meta is freezing new hires and plans to institute additional cost-cutting measures. (Axios) 🚴 Peloton will begin selling its stationary bikes and treadmills at Dick's Sporting Goods in its first in-store partnership. (CNBC) 🎮 Saudi Arabia plans to invest $37 billion in gaming, including by acquiring and developing a game publisher. (Axios)     A message from Equitybee Get access to high-demand, pre-IPO startups     With Equitybee, accredited investors get access to hundreds of high-growth, VC-backed startups and invest at past company valuations by funding employee stock options. In exchange, they get a percentage of the future share value. Choose a startup and start investing.     4. Outsourced audits Illustration: Aïda Amer/Axios   The SEC imposed a $20 million penalty on the Chinese affiliate of accounting giant Deloitte, accusing it of failing to comply with "fundamental U.S. auditing requirements," Axios' Javier E. David writes. The financial watchdog today charged that, over the course of several years, Deloitte's China employees allowed clients to choose their own samples for audits and prepare documents, creating the appearance that the firm had conducted the due diligence. What they're saying: In a statement, SEC chair Gary Gensler said Deloitte's China arm "fell woefully short of professional auditing requirements in numerous component audits of Chinese operations of U.S. issuers and audits of Chinese companies listed on U.S. exchanges." The big picture: Auditing Chinese companies has been one of several flashpoints between Washington and Beijing, at a time when both the U.S. and Chinese economies are weakening amid an ever-lengthening list of geopolitical grievances. Go deeper.   Share Axios and earn rewards If you like this newsletter, your friends may, too! Refer your friends and get free Axios swag when they sign up. Be a good friend and share   5. Not everyone was smiling Via Twitter Baseball fans over the past week have been a little freaked out, Axios' Pete Gannon writes. But alas, that was the plan. Driving the news: Beginning last weekend, a single smiling fan in a seat right behind home plate was standing out on certain game broadcasts for what they weren't doing: Moving. Broadcasters picked up on it. A stadium security guard in Oakland bravely asked one to sit down. And people at home started flooding Twitter with questions about what was going on. It turns out, it was some clever marketing. The disturbing people were paid actors promoting the upcoming movie "Smile," premiering Sept. 30. For many of us — that was very relieving news.     6. What they're saying "Cybertruck will be waterproof enough to serve briefly as a boat, so it can cross rivers, lakes & even seas that aren't too choppy." — Elon Musk, in a tweet, claiming that Tesla's forthcoming electric pickup will double as an amphibious vehicle.     A message from Equitybee Unlock access to high-growth startups     Equitybee gives accredited investors unprecedented access to high-growth, VC-backed startups. What's in it for you: Invest in startups at past valuations by funding employee stock options. Then, you receive a portion of the future share. Get started in minutes.   Today's newsletter was edited by Pete Gannon and copy edited by Sheryl Miller. Why stop here? Let's go Pro. Join the thousands of professionals using Axios Pro to keep up with the companies, deals and trends changing their industries.   Axios thanks our partners for supporting our newsletters. If you're interested in advertising, learn more here. Sponsorship has no influence on editorial content. Axios, 3100 Clarendon B‌lvd, Arlington VA 22201   You received this email because you signed up for newsletters from Axios. Change your preferences or unsubscribe here.   Was this email forwarded to you? Sign up now to get Axios in your inbox.   Follow Axios on social media: