FloodSmart Re Ltd

Alternative capital investors are about to have their resilience tested again, according to S&P Global Ratings, who said that although it is too early to have an accurate quantification of industry losses from hurricane Ian, it’s clear this is a major event for the reinsurance and ILS sector.

Some further data points on the catastrophe bond market impact from hurricane Ian have come to light, in the form of pricing sheets and also some output from modelling company tools that generate loss estimates information specifically for the cat bond market and insurance-linked securities (ILS) investors.

Early indications from catastrophe bond funds that price or mark their net asset values more regularly, or managers we’ve spoken with, suggest a roughly mid-single digit decline, on average, for the cat bond fund market in response to hurricane Ian.

After hurricane Ian, there is the potential for “significant” erosion to aggregate catastrophe bonds, according to investment manager Twelve Capital.

KatRisk, a specialist provider of catastrophe modeling solutions for flood and wind risk, has published an estimate of wind, surge and flood related economic losses from hurricane Ian, pegging the total at $46 billion, but that figure could be plus or minus $16.1 billion.

Hurricane Ian’s impact is likely to cause losses to some Florida focused indemnity catastrophe bonds, as well as to some of the NFIP’s FloodSmart Re cat bond series, according to investment manager Twelve Capital.

So far, major hurricane Ian’s approach to the west coast of Florida and the Tampa Bay region has not stimulated a significant amount of catastrophe bond trading, with the secondary market relatively quiet. Except for one telling trade that shows investor nerves over potential storm surge impacts are rising.

Recent severe inland flooding across the United States, including the Kentucky floods that have devastated many communities, are not expected to result in losses that would trouble the National Flood Insurance Program’s (NFIP) reinsurance or catastrophe bonds.

The U.S. Federal Emergency Management Agency (FEMA) has hailed the successful completion of the issuance of its new $450 million  FloodSmart Re Ltd. (Series 2022-1)  catastrophe bond, which has expanded the capital markets participation in the National Flood Insurance Program’s (NFIP) reinsurance tower.

The U.S. Federal Emergency Management Agency (FEMA) has now secured the $450 million upper-target for its new FloodSmart Re Ltd. (Series 2022-1)  catastrophe bond, with the deal set to more than replace a maturing cat bond and lift the capital markets share of the National Flood Insurance Program’s (NFIP) reinsurance tower.