Commenting on hurricane Milton post-landfall, disaster bond fund supervisor Icosa Investments has mentioned that it anticipates the influence to the disaster bond market shall be under 5%.
The corporate defined, “Present estimates for insured losses from Milton are between 20 and 60 billion USD. Nonetheless, this vary remains to be topic to important uncertainty, and figures might shift as extra knowledge turns into obtainable within the coming weeks. Based mostly on these loss estimates, we count on losses for the cat bond market of under 5%.
“A short lived markdown in Friday’s valuation is probably going because of the ongoing uncertainty.
“The decreased retention ranges for mixture bonds can even play a short lived position in efficiency and must be monitored going ahead.”
The corporate added that, “With these nonetheless important losses for the reinsurance trade, premiums are anticipated to stay elevated and even rise additional within the coming weeks. This creates a beautiful entry level for buyers within the cat bond market.”
CEO of Icosa Investments Florian Steiger additionally mentioned, “Though it won’t really feel this method to the individuals in Florida dealing with excessive devastation from Hurricane Milton, the scenario is a marked enchancment in comparison with earlier issues of a direct hit on Tampa as a possible Class 4 hurricane, which might have resulted in far larger insured losses than are actually anticipated. From a cat bond funding perspective, this occasion will possible hold us engaged for a while, as loss stories from particular person cedants start to emerge within the coming weeks.
“Whereas insured losses will nonetheless be substantial — possible properly into the double-digit billion vary — an additional hardening of the reinsurance market appears potential. This can possible drive reinsurance premiums larger, together with within the cat bond market. With the first market season now underway, it will likely be fascinating to see how these dynamics unfold. Moreover, subjects reminiscent of “loss creep” and “attachment erosion” shall be essential within the coming months, as they might considerably affect final loss estimates and payout buildings.”
As we reported earlier, reinsurance brokers had pointed to a $15 billion to $40 billion range for the insurance market loss prior to landfall.
Different disaster bond market sources we’ve spoken to this morning are suggesting that losses to cat bonds will fall within the low single digit proportion of the market, so maybe the lower-half of a 0% to five% vary. Time will inform.
Issues ought to get clearer over the approaching days and loss ranges will slim considerably.
Additionally learn:
– Hurricane Milton: Pre-landfall broker loss estimates ranged $15bn to $40bn.
– Hurricane Milton Cat 3 landfall in Sarasota. Worst case Tampa loss scenarios avoided.
– Hurricane Milton: Insurance, reinsurance, cat bonds, ILS ready to respond.
– Some mutual cat bond and ILS fund NAVs fall further on hurricane Milton threat.
– Hurricane Milton industry loss at $25bn+ changes pricing narrative: Goldman Sachs.
– Hurricane Milton cat bond loss potential still in wide range: Icosa Investments.
– Hurricane Milton seen denting cat bond market -1.4% (excl. surge): Plenum.
– 33% chance hurricane Milton loss above $50bn. Would drive hard market: Euler ILS Partners.
– Hurricane Milton Cat 5 again. Tracks slightly south. Uncertainty still high, loss range wide.
– Safe to say hurricane Milton likely a $20bn+ insurance market event: Siffert, BMS.
– Hurricane wind speeds forecast across entire Florida Peninsula as Milton approaches.
– Mexico’s catastrophe bond presumed safe from hurricane Milton.
– Stone Ridge leads managers cutting mutual cat bond or ILS fund NAVs on hurricane Milton.
– Hurricane Milton could be a huge test for the entire (re)insurance market: Evercore ISI.
– Hurricane Milton losses could amount to tens of billions, but uncertainty high: BMS’ Siffert.
– As hurricane Milton intensifies, Mexico’s catastrophe bond comes into focus.
– Material hurricane Milton losses could change 2025 property reinsurance price trajectory: KBW.
– Cat bond & ILS managers explore options to free cash, as hurricane Milton approaches.
– Hurricane Milton: First Tampa Bay storm surge indications 8 to 12 feet.
– Hurricane Milton is biggest potential ILS market threat since Ian in 2022: Steiger, Icosa.
– Hurricane Milton forecast for costly Florida landfall. Cat bond & ILS market on watch.
