Hurricane Ian 2022

Because some of the capital in the reinsurance industry that had been nervous about potential losses from last year’s hurricane Ian has now calmed down somewhat, Russell Merrett, Chief Underwriting Officer of Inigo, the Lloyd’s syndicate owner and specialty underwriter, believes there will be more certainty on capital availability at this year’s renewals.

Artemis can report that the reinsurance carriers participating in the lowest layer of FEMA’s 2022 National Flood Insurance Program (NFIP) reinsurance tower now appear to be facing losses from hurricane Ian, as the NFIP’s claims from the storm have risen to $4.3 billion.

The U.S. Federal Emergency Management Agency (FEMA) has begun the process to renew the National Flood Insurance Program’s (NFIP) traditional reinsurance tower for 2024 this week.

According to our sources, insurance-linked securities (ILS) fund managers are having continued success at closing down certain exposures to last year’s hurricane Ian, with a number of side pockets being finalised and trapped capital continuing to be freed.

The $50 million of Integrity Re Ltd. (Series 2019-1)  catastrophe bond notes sponsored by US primary insurer American Integrity have now had their maturity date extended out, as they continue to have potential exposure to the ongoing development of losses from last year’s hurricane Ian.

The one Florida focused catastrophe bond sponsored by US insurer Allstate that is considered facing a complete loss of principal after last year’s hurricane Ian has now had its maturity date extended, suggesting the insurers’ ultimate loss for the event has yet to be finalised.

Catastrophe bond funds in the UCITS format are averaging approximately 6.20% returns year-to-date in 2023, while over a 12-month horizon the average return is now 3.57%, even accounting for major hurricane Ian’s losses in Florida.

A tranche of FloodSmart Re catastrophe bond notes that provide reinsurance to the US Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program (NFIP) have now been deemed safe from potential loss due to hurricane Ian, with the notes redeemed and capital to be returned to investors, Artemis has learned.

A particularly strong performance through the month of April 2023 now sees catastrophe bond funds in the UCITS format with an average return for the first four months of the year of 5.50%, with both higher and lower-risk cat bond fund strategies faring particularly well during the period.

Reinsurance carriers participating in the lowest layer of FEMA’s National Flood Insurance Program (NFIP) reinsurance tower are now at-risk of losses, as the NFIP’s claims from hurricane Ian have surpassed $3.9 billion, nearing the $4 billion trigger.