Human loss is the greatest concern. But those events also changed the landscape for investors in energy, insurance and banking companies, who now take the concept of risk more seriously.

Governments and companies have pledged to be diligent, especially because federal forecasters expect above-average hurricane activity this season. Concern is always present because the Gulf of Mexico is vital to energy supplies and vulnerable to severe weather.

"There is no free lunch, so you have to be in the Gulf of Mexico and operate efficiently there throughout the year, even though you know that you'll be under the gun from June through November," said Kimberly DuBord, energy analyst with Briefing.com in Chicago. "Energy producers are trying to ramp up production, and the best way to do that is to be in the `hot spots' offering the most rewards, which include the Gulf of Mexico, West Texas, offshore Nigeria and Indonesia."

Although oil refiners shut down much longer than expected last year because of floods and mud, DuBord said, this ultimately resulted in much higher profit margins because of higher prices.

In insurance, for example, premiums and deductibles for wind coverage have risen, and insurers are more selective in accepting coverage. Ruling in one of a raft of lawsuits against insurers, a federal judge found that Nationwide Mutual Insurance Co. was correct to deny the majority of a claim filed by a Gulf Coast couple because their home was destroyed by flooding, which is not covered in most standard homeowner policies.

"Insurance expectations for storm losses have gone up, and the price of both catastrophic reinsurance and homeowners' costs for hurricane-prone areas have increased dramatically," said Cliff Gallant, an insurance industry analyst with Keefe Bruyette & Woods in New York. "But while companies are paid better to take risk than a year ago, ultimately what the weather does will determine if they have a bad year or not."

"Ever since Hurricane Andrew in 2002, regional banks in the Southeast have taken pains to reinforce their ability to withstand severe weather and are much better prepared than in the past," said Tony Davis, managing director of Ryan Beck & Co. in Richmond, Va. "For example, serious problems such as interrupted service, dislocated customers and damaged facilities require the consolidating of branches and extending of hours."

Because all of the risks are now on the table, investing in companies that might be affected by severe weather may not be as risky as you'd think.

In energy, deep-sea markets provide the best opportunity for greater production, which is why DuBord recommends the stock of offshore driller Transocean Inc. and natural gas producer Devon Energy Corp.

The oil services industry is benefiting because money flowing into major energy companies is now being put back into the field to drive production. DuBord likes Schlumberger Ltd., Halliburton Co. and BJ Services Co.

In the insurance sector, "over the next couple of months it is all a bet on the weather," Gallant said. "But looking over a five-year period, you should be asking questions about each company, such as who has a better business mix, who underwrites better and who tends to perform better when there are storms."

Reinsurance firms have gained increased attention. In reinsurance, one insurance company agrees to indemnify another insurance company, in whole or in part, against risks that the first company has assumed. The original contract of insurance and the reinsurance contract are separate.

Catastrophe reinsurance firms Renaissance Re Holdings Ltd., Montpelier Re Holdings Ltd. and IPC Holdings Ltd. are companies that Gallant considers worth tracking for potential investment. Even more speculative, PXRE Group Ltd., pummeled by huge losses last year and a stock price plummet, could potentially be interesting, he believes.

"Since you can't handicap or forecast acts of God, banking companies in these areas will have less predictable earnings, revenues and cash-flow streams," Davis said.

"Banks in the Southeast, such as those in New Orleans and Mississippi, have seen their stock prices negatively impacted, while merger activity in Florida has increased the stock prices of banks there."

Demographic trends in many Southeastern markets remain highly attractive, Davis acknowledged, but he is not recommending any Florida regional banks right now because he believes their stock prices have risen too high. He is generally expecting increased banking consolidation in the Florida, Mississippi and Louisiana markets.

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