tropical storm Ian 2022

The Florida insurance market capital stack is likely decimated after hurricane Ian’s landfall last week, raising the question of how this marketplace replenishes it and also highlighting the need for access to efficient sources of capital.

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.

Analysts at KBW have tried to put some figures on the potential hurricane Ian loss impact for some of the main insurance and reinsurance names they cover, with RenaissanceRe currently seen by the firm as the company likely to take the biggest hit, as a percentage of its common equity.

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 is expected to change the insurance market landscape entirely in Florida and litigation is still expected to be an issue in the claims process despite the attempts at legislative reform, RMS’ Chief Risk Modeling Officer Mohsen Rahnama has implied.

Verisk has come out with its first post-landfall and official estimate of insurance and reinsurance market losses from hurricane Ian, saying that the onshore property insured loss is estimated to be in a range from $42 billion to $57 billion.

The catastrophe bond market index calculated by Swiss Re Capital Markets, the insurance-linked securities (ILS) specialist arm of the global reinsurance firm, plummeted when priced on Friday, due to the potential impacts and losses cat bonds face after Hurricane Ian.