Hawaiian Electric shares plummet after Maui wildfire; retirement accounts affected

Shares of Hawaiian Electric Industries Inc. have dropped to their lowest level since 2010, dragging retirement plan participants' accounts with them, as investors remain uncertain about whether the holding company's utility subsidiary played a role in the deadly fires that swept the island of Maui.

The stock lost 31% to $14.79 per share by the end of New York Stock Exchange trading Tuesday, dropping more than half its value from July 25. Tuesday’s trading volume was nearly 34 times the average daily trade.

Hawaiian Electric Industries is the holding company for an electric utility, Hawaiian Electric Co., and a financial services company, American Savings Bank, both of which have 401(k) plans whose investment lineups include Hawaiian Electric stock.

The utility's Hawaiian Electric Industries Retirement Savings Plan, Honolulu, had $71 million in holding company stock, or 11.6% of total plan assets as of Dec. 31, 2022, according to the latest 11-K filing.

The American Savings Bank 401(k) plan had $15 million in Hawaiian Electric stock, or 9.2% of total plan assets also as of Dec. 31, 2022, according to the latest 11-K.

The stock plunge was exacerbated by S&P Global Ratings dropping to junk bond-level the rating for Hawaiian Electric Industries Inc. and several subsidiaries. S&P put them on "CreditWatch Negative on higher wildfire risk," according to an announcement Tuesday. S&P reduced the ratings to BB- for the holding company and all of its rated subsidiaries.

"Separately, class-action lawsuits have been filed against Hawaiian Electric Industries Inc. and its subsidiaries, Hawaiian Electric Co. Inc., Maui Electric Co. Ltd., and Hawaii Electric Light Co. Inc. which has increased the risk of a material deterioration in Hawaiian Electric Industries' credit quality, should the plaintiffs prevail," S&P said Tuesday.

"The CreditWatch placement with negative implications reflects the potential for additional downgrades of one or more notches within the coming months," S&P said.

Investors are dumping holdings amid increasing scrutiny over power equipment as the possible source of the deadly Maui wildfire, according to Bloomberg. Analysts are starting to raise questions over whether Hawaiian Electric, one of the smallest publicly traded U.S. utilities, will be able to withstand the pressure if it does end up being at fault.

To be clear: No official cause of the fire, which has become the deadliest in the U.S. in more than a century, has been identified. And it could be weeks — even months — before any investigation is finalized.

Bloomberg contributed to the story.