Earthquake Insurance Window Short
In plain terms
When a major earthquake (magnitude 6 or higher) hits California, Japan, or the Pacific Rim, reinsurers take an immediate loss-recognition hit — short them for 1-2 weeks. Construction firms gain on rebuild demand — go long for 3 months.
How it works
Major earthquakes (M >= 6.0) in California, Japan, or Pacific Rim regions trigger expected cat-loss premium widening for regional reinsurers — they take on the immediate loss estimate ahead of the formal accounting. Construction equity gets the longer-horizon rebuild bid. This family is the focused reinsurer SHORT 5-10d + construction LONG 60-90d pair.
Data dependencies
- Daily prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.
- Usgs earthquakes
A data feed this strategy reads, refreshed on its normal schedule.
Expected edge
- Reported return
- -2-4% reinsurer / +2-4% construction
- Tested over
- Reinsurer T+1 to T+10d; Construction T+1 to T+90d
-2-4% reinsurer over 5-10d; +2-4% construction over 60-90d (Ferreira-Karali 2015).
Example tickers where this is likely to fire
Illustrative only, the signal fires based on the live data, not a fixed list.
Related families
M6.0+ earthquake → short P&C insurers 1-15 days.
Big CA earthquake -> CA-exposed REITs/banks/utilities do NOT sell off; tests the paper's no-drop (slightly positive) effect over the following week.
When El Niño or La Niña intensify (|ONI| >= 1.5), US severe weather (tornadoes, hurricanes, typhoons) tends to be more active. Property & casualty insurers (AIG, Travelers, Allstate, Progressive) face higher catastrophe losses. Short the basket for 3-6 months.
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