TORONTO -- Canadian financial service companies in the reinsurance business could take a financial hit from superstorm, Sandy, the furious storm that has all but shut down the Eastern Seaboard.

The storm roared ashore on the New Jersey coast Monday night was also brought heavy rains, strong winds and high waves in parts of Ontario, Quebec and the Maritimes.

The National Hurricane Center in Miami said the centre of the enormous storm made landfall at 8 p.m. near Atlantic City, after it was reclassified from a hurricane to a post-tropical cyclone.

Preliminary estimates are that damage will range between $10 billion and $20 billion. That could top last year's hurricane Irene, which cost $15.8 billion.

If so, Sandy would be among the 10 most costly storms in U.S. history. But it would still be far below the worst _ hurricane Katrina, which cost $108 billion and caused 1,200 deaths in 2005.
Peter Morici, professor at the University of Maryland pegs the economic impact in the U.S. even higher -- at about $35 to $45 billion.

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  • A casket floated out of the grave in a cemetery in Crisfield, Md. after the effects of superstorm Sandy Tuesday, Oct. 30, 2012. Hundreds of people were displaced by floodwaters in Ocean City and in Crisfield. At the same time, 2 feet of snow fell in westernmost Garrett County, were nearly three-quarters of residents lost power. (AP Photo/Alex Brandon)

  • An ambulance is submerged in floodwaters in the wake of superstorm Sandy on Tuesday, Oct. 30, 2012, in Hoboken, N.J. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/Mike Groll)

  • A vehicle drives on a flooded street in the wake of superstorm Sandy on Tuesday, Oct. 30, 2012, in Hoboken, N.J. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/Mike Groll)

  • A firehouse is surrounded by floodwaters in the wake of superstorm Sandy on Tuesday, Oct. 30, 2012, in Hoboken, N.J. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/Mike Groll)

  • A vehicle drives on a flooded street in the wake of superstorm Sandy on Tuesday, Oct. 30, 2012, in Little Ferry, N.J. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/Mike Groll)

  • An emergency vehicle drives on a flooded street in Little Ferry, N.J. in the wake of superstorm Sandy on Tuesday, Oct. 30, 2012. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/Mike Groll)

  • An emergency vehicle drives on a flooded street in Little Ferry, N.J. in the wake of superstorm Sandy on Tuesday, Oct. 30, 2012. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/Mike Groll)

  • Rescue workers help stranded people out of their flooded homes in Seaside Heights, N.J., following the arrival of superstorm Sandy, Tuesday, Oct. 30, 2012. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/Julio Cortez)

  • Rescue workers help stranded people out of their flooded homes in Seaside Heights, N.J., following the arrival of superstorm Sandy, Tuesday, Oct. 30, 2012. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/Julio Cortez)

  • A runway at the Teterboro Airport is flooded in the wake of superstorm Sandy on Tuesday, Oct. 30, 2012, in New York. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/Mike Groll)

  • Homes in Bethany Beach, Del. are surrounded by floodwaters from superstorm Sandy on Tuesday, Oct. 30, 2012. Officials said Bethany and nearby Fenwick Island appeared to be among the hardest-hit parts of the state. (AP Photo/Randall Chase)

  • Floodwaters from superstorm Sandy surround homes in South Bethany, Del. Tuesday, Oct. 30, 2012. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/The Wilmington News-Journal, Robert Craig) NO SALES

  • Floodwaters from superstorm Sandy surround homes in South Bethany, Del. Tuesday, Oct. 30, 2012. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/The Wilmington News-Journal, Robert Craig) NO SALES

  • Downed power lines and a battered road is what superstorm Sandy left behind as people walk off the flooded Seaside Heights island, Tuesday, Oct. 30, 2012. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/Julio Cortez)

  • This photo provided by the Metropolitan Transportation Authority shows the South Ferry subway station after it was flooded by seawater during superstorm Sandy on Tuesday, Oct. 30, 2012. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/ Metropolitan Transportation Authority)

  • Debris litters the beach north of Indian River Inlet in southern Delaware after waves churned up by superstorm Sandy demolished hundreds of yards of beach dunes and left state Route 1, the major north-south coastal highway, covered in sand. (AP Photo/Randall Chase)

  • This photo provided by the Metropolitan Transportation Authority shows the South Ferry subway station after it was flooded by seawater during superstorm Sandy on Tuesday, Oct. 30, 2012. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/ Metropolitan Transportation Authority)

  • This photo provided by the Metropolitan Transportation Authority shows the South Ferry subway station after it was flooded by seawater during superstorm Sandy on Tuesday, Oct. 30, 2012. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/ Metropolitan Transportation Authority)

  • Streets around a Con Edison substation are flooded as the East River overflows into the Dumbo section of Brooklyn, N.Y., as Sandy moves through the area on Monday, Oct. 29, 2012. After a gigantic wall of water defied elaborate planning and swamped underground electrical equipment at a Consolidated Edison substation in Manhattan's East Village, about 250,000 lower Manhattan customers were left without power. (AP Photo/Bebeto Matthews)

  • In this Monday, Oct. 29, 2012, file photo, Consolidated Edision trucks are submerged on 14th Street near the ConEd power plant in New York. After a gigantic wall of water defied elaborate planning and swamped underground electrical equipment at a Consolidated Edison substation in Manhattan's East Village, about 250,000 lower Manhattan customers were left without power. (AP Photo/John Minchillo)

  • Downed power lines and a battered road is what superstorm Sandy left behind as people walk off the flooded Seaside Heights island, Tuesday, Oct. 30, 2012. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/Julio Cortez)

  • This photo taken Tuesday, Oct. 30, 2012, shows what appear to be transformers exploding after much of lower Manhattan lost power during hurricane Sandy in New York. After a gigantic wall of water defied elaborate planning and swamped underground electrical equipment at a Consolidated Edison substation in Manhattan's East Village, about 250,000 lower Manhattan customers were left without power. (AP Photo/Karly Domb Sadof)

  • Peter Andrews removes belongings from his father's beachfront home, destroyed in the aftermath of a storm surge from the superstorm Sandy, Tuesday, Oct. 30, 2012, in Coney Island's Sea Gate community in New York. Andrews, 40, who was born in the house, said "we had a lot of storms and the only damage in the past was when a national guardsman threw a sandbag through the window." He added, the house was in the process of being sold. (AP Photo/Bebeto Matthews)

  • A small shop that rents personal water craft rests in a huge sinkhole on the bayside in Ocean City, N.J. Tuesday, Oct. 30, 2012 after a storm surge from superstorm Sandy Monday night. (AP Photo/Mel Evans)

  • A beachfront house is completely destroyed in the aftermath of a superstorm Sandy, Tuesday, Oct. 30, 2012, in Coney Island's Sea Gate community in New York. (AP Photo/Bebeto Matthews)

  • The entrance to a beachfront house is destroyed in the aftermath of a storm surge from superstorm Sandy, Tuesday, Oct. 30, 2012, in Coney Island's Sea Gate community in New York. (AP Photo/Bebeto Matthews)

  • A second floor closet is exposed in a beachfront house in the aftermath of a storm surge from Hurricane Sandy, Tuesday, Oct. 30, 2012, in Coney Island's Sea Gate community in New York. (AP Photo/Bebeto Matthews)

  • People stop along the Brooklyn waterfront to photograph the Brooklyn Bridge and the Manhattan skyline, Tuesday, Oct. 30, 2012 in New York. Much of lower Manhattan is without electric power following the impact of superstorm Sandy. (AP Photo/Mark Lennihan)

  • Marcus Konner, 22, boards his home in the aftermath of a storm surge from Hurricane Sandy, Tuesday, Oct. 30, 2012, in Coney Island's Sea Gate community in New York. (AP Photo/Bebeto Matthews)

  • People walk through the houses destroyed in the aftermath of yesterday's storm surge from superstorm Sandy, Tuesday, Oct. 30, 2012, in Coney Island's Sea Gate community in New York. (AP Photo/Bebeto Matthews)

  • Carlo Popolano stands outside his beachfront home, damaged in superstorm Sandy, on Tuesday, Oct. 30, 2012, in Coney Island's Sea Gate community in New York. Popolano said he was watching the storm with his son and "everything was okay until about 7:30 and then one big wave came and washed away our whole backyard." (AP Photo/Bebeto Matthews)

  • A beachfront house is completely destroyed in the aftermath of yesterday's surge from superstorm Sandy, Tuesday, Oct. 30, 2012, in Coney Island's Sea Gate community in New York. (AP Photo/Bebeto Matthews)

  • A backyard is inundated with floodwaters in the aftermath of Sandy, Tuesday, Oct. 30, 2012, in Lewes, Del. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/Randall Chase)

  • A car is upended on a mailbox on Surf Avenue in Coney Island, N.Y., in the aftermath of Sandy on Tuesday, Oct. 30, 2012. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/Ralph Russo)

  • This handout photo provided by NOAA, taken Tuesday, Oct. 30, 2012, shows post-tropical storm Sandy off the East Coast of the US. Campaign 2012 is rich with images that conjure the seriousness and silliness that unfold side-by-side in any presidential race. Who could have predicted that a superstorm would overshadow and scramble the presidential campaign in its final days? President Barack Obama and Mitt Romney revised and re-revised their campaign schedules as Hurricane Sandy, a most unlikely October surprise, barreled up the East Coast and then roared ashore in New Jersey. (AP Photo/NOAA)

  • A parking lot full of yellow cabs is flooded as a result of superstorm Sandy on Tuesday, Oct. 30, 2012 in Hoboken, NJ. (AP Photo/Charles Sykes)

  • A beachfront house is damaged in the aftermath of yesterday's surge from superstorm Sandy, Tuesday, Oct. 30, 2012, in Coney Island's Sea Gate community in New York. (AP Photo/Bebeto Matthews)

  • A car is upended on a mailbox on Surf Avenue in Coney Island, N.Y., in the aftermath of Sandy on Tuesday, Oct. 30, 2012. Sandy, the storm that made landfall Monday, caused multiple fatalities, halted mass transit and cut power to more than 6 million homes and businesses. (AP Photo/Ralph Russo)

  • Damage caused by a fire at Breezy Point is shown Tuesday, Oct. 30, 2012, in New York. A fire department spokesman says more than 190 firefighters are at the blaze in the Breezy Point section. Fire officials say the blaze was reported around 11 p.m. Monday in an area flooded by the superstorm that began sweeping through earlier. (AP Photo/Frank Franklin II)

  • Fire still burns at the scene of a fire in Breezy Point, in the New York City borough of Queens Tuesday, Oct. 30, 2012, in New York. The fire destroyed between 80 and 100 houses Monday night in the flooded neighborhood. More than 190 firefighters have contained the six-alarm blaze fire, but they are still putting out some pockets of fire. (AP Photo/Frank Franklin II)

  • East Coast Begins To Clean Up And Assess Damage From Hurricane Sandy

    ATLANTIC CITY, NJ - OCTOBER 30: People stand on a mound of construction dirt to vew the area where a 2000-foot section of the 'uptown' boardwalk was destroyed by flooding from Hurricane Sandy on October 30, 2012 in Atlantic City, New Jersey. The storm has claimed at least 33 lives in the United States, and has caused massive flooding accross much of the Atlantic seaboard. US President Barack Obama has declared the situation a 'major disaster' for large areas of the US East Coast including New York City. (Photo by Mario Tama/Getty Images)

  • Homes damaged by a fire at Breezy Point are shown, in the New York City borough of Queens Tuesday, Oct. 30, 2012, in New York. The fire destroyed between 80 and 100 houses Monday night in the flooded neighborhood. More than 190 firefighters have contained the six-alarm blaze fire, but they are still putting out some pockets of fire. (AP Photo/Frank Franklin II)

  • East Coast Begins To Clean Up And Assess Damage From Hurricane Sandy

    ATLANTIC CITY, NJ - OCTOBER 30: A man walks over debsris where a 2000-foot section of the 'uptown' boardwalk was destroyed by flooding from Hurricane Sandy on October 30, 2012 in Atlantic City, New Jersey. The storm has claimed at least 33 lives in the United States, and has caused massive flooding accross much of the Atlantic seaboard. US President Barack Obama has declared the situation a 'major disaster' for large areas of the US East Coast including New York City. (Photo by Mario Tama/Getty Images)

  • East Coast Begins To Clean Up And Assess Damage From Hurricane Sandy

    NEW YORK, NY - OCTOBER 30: Ground Zero is seen on October 30, 2012 in the Financial District of New York, United States. The storm has claimed at least 33 lives in the United States, and has caused massive flooding accross much of the Atlantic seaboard. US President Barack Obama has declared the situation a 'major disaster' for large areas of the US East Coast including New York City. (Photo by Andrew Burton/Getty Images)

  • US-WEATHER-STORM-SANDY

    Sailboats rest on the ground after being tipped over by Hurricane Sandy on City Island October 30, 2012 in New York. US President Obama declared New York a disaster area. The death toll from superstorm Sandy has risen to 16 in the mainland United States and Canada, and was expected to climb further as several people were still missing, officials said Tuesday. AFP PHOTO/DON EMMERT (Photo credit should read DON EMMERT/AFP/Getty Images)

  • US-WEATHER-STORM-SANDY

    Boats rest on the ground after floating from their stands at dry dock on City Island , in New York October 30, 2012 following Hurricane Sandy's impact. US President Obama declared New York a disaster area The death toll from superstorm Sandy has risen to 16 in the mainland United States and Canada, and was expected to climb further as several people were still missing, officials said Tuesday. AFP PHOTO/DON EMMERT (Photo credit should read DON EMMERT/AFP/Getty Images)

  • Homes destroyed by a fire at Breezy Point are shown, in the New York City borough of Queens Tuesday, Oct. 30, 2012, in New York. The fire destroyed between 80 and 100 houses Monday night in the flooded neighborhood. More than 190 firefighters have contained the six-alarm blaze fire, but they are still putting out some pockets of fire. (AP Photo/Frank Franklin II)

  • US-WEATHER-STORM-SANDY

    Boats rest on the ground after floating from their stands at dry dock on City Island , in New York October 30, 2012 following Hurricane Sandy's impact. US President Obama declared New York a disaster area The death toll from superstorm Sandy has risen to 16 in the mainland United States and Canada, and was expected to climb further as several people were still missing, officials said Tuesday. AFP PHOTO/DON EMMERT (Photo credit should read DON EMMERT/AFP/Getty Images)

  • US-WEATHER-STORM-SANDY

    Residents look at damage left by Hurricane Sandy on City Island, New York, October 30, 2012. US President Obama declared New York a disaster area The death toll from superstorm Sandy has risen to 16 in the mainland United States and Canada, and was expected to climb further as several people were still missing, officials said Tuesday. AFP PHOTO/DON EMMERT (Photo credit should read DON EMMERT/AFP/Getty Images)

  • US-WEATHER-STORM-SANDY

    Boats rest on the ground after floating from their stands at dry dock on City Island , in New York October 30, 2012 following Hurricane Sandy's impact. US President Obama declared New York a disaster area The death toll from superstorm Sandy has risen to 16 in the mainland United States and Canada, and was expected to climb further as several people were still missing, officials said Tuesday. AFP PHOTO/DON EMMERT (Photo credit should read DON EMMERT/AFP/Getty Images)

  • East Coast Begins To Clean Up And Assess Damage From Hurricane Sandy

    NEW YORK, NY - OCTOBER 30: A truck drives through a flooded street, caused by Hurricane Sandy, on October 30, 2012, in the Lower East Side of New York City. The storm has claimed at least 33 lives in the United States, and has caused massive flooding accross much of the Atlantic seaboard. US President Barack Obama has declared the situation a 'major disaster' for large areas of the US East Coast including New York City. (Photo by Andrew Burton/Getty Images)


”It seems likely that Sandy will impose greater destruction of property, and add to that the loss of about two days commercial activity, spread over a week across 25 per cent of the economy,'' he said.

Canadian companies who provide reinsurance to property and catastrophe insurance companies, such as Bank of Montreal (TSX:BMO), Great-West Lifeco. (TSX:GWO) and Manulife Financial Corp. could see a drag on earnings in the fourth quarter if damage is significant, says RBC analyst Andre-Philippe Hardy.

Reinsurance companies write backup insurance for primary insurers so that the insurance industry can cover catastrophic claims, such as from natural disasters. The impact on the companies depend on many factors, such as how much of the damage was insured by them and how much they charged for coverage.

In Monday trading on the Toronto Stock Exchange, BMO shares closed 17 cents lower at $59.57, Great-West Life lost nine cents to $22.70 and Manulife stock was down 1.3 per cent or 16 cents at $12.14.

Wall Street markets were closed until at least Wednesday in the face of the storm. The last time trading was halted for two consecutive days due to weather was in 1888.


MORE ON SANDY IN CANADA

However, Hardy said he didn't think the effects would have a lasting impact on their stock values.

“For all three institutions, exposure is generally at a level that represents a potential drag to quarterly earnings -- i.e., the exposures are managed to be below a size that would erase quarterly earnings or cause a capital issue. As such, investors usually look at catastrophe hits as one-time and there is no lasting effect on stocks.''


Hardy pointed to financial impacts on those three companies related to earthquakes in Japan and New Zealand in 2011 as examples of their risk management strategies.

Great-West booked $84 million in net negative impacts, while Bank of Montreal had $55 million.

Manulife was hardest hit by the Japanese earthquake and had a $151-million after tax losses related to the disaster, and Hardy believes it also has the largest exposure to U.S. hurricanes.

“We believe that Manulife has high attachment points (and single-event limits) for U.S. hurricane exposure. When Katrina hit New Orleans in 2005, it caused after tax losses of US$165 million for Manulife,'' he said.

Fairfax Financial Holdings Ltd., one of Canada's largest insurance and reinsurance groups, also took a financial hit from Japan's massive earthquake and tsunami, but was not mentioned in Hardy's note.

If the storm did cause damage in Canada, Intact Financial Corp. (TSX:IFC), the largest provider of property and casualty insurance in Canada, would also have exposure, he added.

Shares in Intact closed down 1.9 per cent, or $1.15 at $59.50 Monday.

Canadian Hurricane Centre spokesman Bob Robichaud said the western Maritimes will see the most rain, with between 50 and 100 millimetres predicted from Tuesday into Wednesday.

Southern Ontario won't be quite as water-logged, with 30 to 50 millimetres of rain expected, but in that region wind will be the biggest concern, as Sandy will bring about 90- to 100 kilometre-per-hour winds, Robichaud said.

Those winds will also whip up the Great Lakes, generating waves of up to seven metres in Lake Huron, he said.

Utility companies in Ontario were preparing for the onslaught by having crews ready to respond to any calls about damage. Emergency Management Ontario warned the storm may result in flooding, road closures and power failure.

Hundreds of flights leaving from airports across Canada bound for the U.S. East Coast were cancelled. At Toronto's international airport, one-quarter of all of its flights departing Monday were cancelled.
Air Canada and WestJet were among those forced to cancel flights.

Carriers could suffer a short-term hit to earnings as they spend more to shuffle crews and planes.

Hurricanes, like other disasters, can cause big losses but also big spikes in economic activity, once homes and buildings are rebuilt or repaired. And Americans may spend more before the storm when they stock up on extra food, water and batteries. Spending can also rise afterward as households restock.

“Rebuilding after Sandy, especially in an economy with high unemployment and underused resources in the construction industry, will unleash at least $15-20 billion in new direct private spending,'' Morici estimates.

“And the capital stock that emerges will prove more economically useful and productive.''

-- With files from the Associated Press

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