tropical storm Ida 2021

Additional loss creep from 2021’s hurricane Ida has now eroded another layer of Louisiana Citizens’ catastrophe bond backed reinsurance protection, with the $50 million Class B notes of the residual market insurers’ Pelican IV Re Ltd. (Series 2021-1) cat bond set to pay out all of their principal in a reinsurance recovery.

Louisiana Citizens Property Insurance Corporation has reported an estimated loss from hurricane Ida of around $461 million, but thanks to its low retention on its reinsurance tower and its catastrophe bonds, the residual market insurer will only retain $35 million.

U.S. primary insurer and global re/insurer Liberty Mutual reported elevated catastrophe losses for the third-quarter of 2021, revealing a net $812 million hit from hurricane Ida.

US primary insurance carrier Allstate reported that its catastrophe reinsurance recoveries for the third-quarter of 2021 are now approaching $1 billion, suggesting the carrier has made additional recoveries through the period since it initially reported its losses from hurricane Ida.

The month of September 2021 saw another $165 million of pre-tax catastrophe losses added to Allstate’s bill for the third-quarter of the year, which has now risen to $1.3 billion thanks to the significant loss it had previously announced from hurricane Ida.

According to our sources, an early estimate of the National Flood Insurance Program’s (NFIP) losses from hurricane Ida suggests that its reinsurance program and catastrophe bonds are less likely to face any impact from the catastrophic event.

Two outstanding per-occurrence catastrophe bond tranches sponsored by Louisiana Citizens Property Insurance Corporation have been marked down much further on some broker pricing sheets in the last week, with secondary market bid pricing now implying a market expectation of a significant loss of principal.

Information from sources suggests that some primary insurance carriers are likely to recover significant amounts from their reinsurance arrangements after hurricane Ida, while a number of insurers are likely to exhaust their reinsurance towers completely, and some catastrophe bonds remain exposed.

Catastrophe bonds sponsored by specialty insurance and reinsurance company Fidelis Insurance Holdings Limited have been marked down by as much as 10%, or slightly more, as industry loss expectations for hurricane Ida rise, while some of the other exposed cat bonds have also seen more price declines.

The Progressive Corporation has reported that its excess-of-loss reinsurance program will reduce its gross exposure to hurricane Ida, a catastrophe event that the insurer says has driven reported and IBNR losses of $510 million in the aggregate across the US Gulf Coast and Northeast.