Here's the logic:

When hurricanes tragically ruin houses, insurance companies see massive cash outflows, as they have to insured people who have unfortunately been displaced. Insurance companies have cash reserves in the event they must make disbursements for destructive natural disasters. This could put these insurers in a financial hole, impacting their stock prices. 

"With Hurricane Dorian, you generally see a lot of investors just have exposure to insurers via some sort of pooled investment vehicle like XLF (XLF - Get Report) {Financial Sector SPDR Fund}, a financial type of ETF," said Shawn Cruz, trading strategy manager at TD Ameritrade. He noted that there aren't so many publicly traded insurance companies, but that there are some in the XLF fund, although there is the $33 billion Allstate (ALL - Get Report) . "They have a lot of customers that they provide coverage to down there {Florida}," Cruz said. "That's a little bit of an exposure." 

But Cruz said, "this is also where reinsurers come into the picture." There aren't many publicly traded reinsurers, or even that many in the XLF, but the ones that exist could get hit hard if they have to insure the front line of insurers like Allstate, which would have to insure Floridians in the case of widespread destruction. 

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