Hurricane Milton

Last week we saw Hurricane Milton form in the Gulf of Mexico and last night it battered the west coast of Florida as a category 3 storm, with significant storm surge across the Tampa region. It then lessened to a category 1 storm and travelled eastwards across Florida before moving off into the Atlantic. The hurricane spawned at least 19 tornadoes causing damage in numerous counties.  It is too early to ascertain the total cost of this loss to the insurance industry but it will definitely reach a level which will impact our property catastrophe writers. Estimates of between $25bn-$60bn have been suggested so far being less than originally feared. In any event the size of the loss is likely to put the brakes on rate reductions for US property catastrophe, which had been assumed to be off up to -10% for next year. This means that prospects for 2025 underwriting look even more attractive than had been advised within our syndicate’s business plans.

Alpha comment

Although Milton has caused significant losses to Florida, it is looking like the widespread damage is less than originally feared. Insured losses are looking similar to Hurricane Ian in 2022 (or potentially a little less). Prior to this event, the market was expecting some rate reductions for 2025 and the potential for retentions to reduce, however, after such a large event this seems unlikely now. We await more accurate loss estimates but the (re)insurance market is well positioned to manage this loss. More importantly, this event will no doubt ensure underwriters remain disciplined for 2025 both for property catastrophe and property D&F business.