With disaster bond market returns remaining elevated, the cat bond market index calculated by Swiss Re Capital Markets rose once more within the final week, regaining the entire decline seen from hurricane Milton and extra, to now stand 0.25% increased than when that storm hit.
When disaster bonds had been priced for the primary time after hurricane Milton’s landfall in Florida, the Swiss Re Global Cat Bond Total Return Index, that tracks the entire outstanding catastrophe bond market, fell 1.34%.
Every week later, as the impacts of the storm became clearer, the Swiss Re catastrophe bond market index bounced back, to depart the benchmark for the complete cat bond market solely -0.30% down, whereas the US wind particular model of the cat bond index additionally recovered to -1.31% for the reason that hurricane made landfall.
Now, with one other week of disaster bond pricing reported on October twenty fifth, the Swiss Re World Cat Bond Complete Return Index, that tracks the complete excellent disaster bond market has regained the entire decline brought on by hurricane Milton, to face 0.25% up for the reason that storm.
The Swiss Re US Wind Cat Bond Complete Return Index, that’s centered solely on US hurricane dangers, additionally rose once more within the final week, to face simply -0.50% down since Milton, as of Friday October twenty fifth.
Relatively than the final week being one other instance of positions recovering, this improve within the indices has been pushed extra by amassed seasonally pushed returns, so extra a case of a return to enterprise as typical.
Whereas there have been some fluctuations in pricing of cat bond positions uncovered to potential losses from hurricane Milton, these appeared extra minor within the newest pricing sheets seen by Artemis, so suggesting that it’s only a return to the extra typical trajectory we’d count on from Swiss Re’s Index right now of yr.
The Swiss Re World Cat Bond Complete Return Index that displays the efficiency of the complete cat bond market has now reached a brand new all-time excessive, as of October twenty fifth’s pricing.
Due to a 0.55% achieve for the World Cat Bond index and 0.82% achieve for the US Wind Cat Bond Index, at pricing on October twenty fifth, over the closest month of pricing each at the moment are optimistic.
The World Index is now up 0.73% since September twenty seventh, whereas the US Wind Index is up by 0.03%.
That means that, whereas the World Index has absorbed hurricane Milton’s preliminary mark-to-market impacts inside simply the 2 following weeks, the US Wind Index has absorbed it inside its final month of returns.
Yr-to-date, since October twenty seventh 2023, the Swiss Re World Cat Bond Complete Return Index is now up by 16.13%, whereas the Swiss Re US Wind Cat Bond Complete Return Index is up by 16.34%, reflecting the sturdy efficiency delivered to disaster bond investments during the last yr and driving residence the actual fact hurricane Milton didn’t derail that.
It’s additionally value a take a look at the Plenum CAT Bond UCITS Fund Indices which initially noticed a -0.42% fall on hurricane Milton, at October eleventh.
The newest information for the UCITS cat bond fund index reveals a mixture of partial restoration for sure positions, in addition to typical seasonal returns, bringing this extra disaster bond market benchmark again to simply 0.1% under the place it stood pre-Milton, as of October 18th.
Therefore, it appears like the UCITS cat bond fund index may even regain the entire hurricane Milton decline inside simply two weeks, as soon as its pricing information is on the market for October twenty fifth.
