Range of Milton insured losses high at 15bn-150bn+: Icosa Investments

Icosa Investments, a catastrophe bond fund manager, has projected potential insurance industry losses from Hurricane Milton, ranging from $15 billion to over $150 billion, depending on the storm’s landfall location, intensity, and path.

“To assist investors in navigating the potential newsflow around Hurricane Milton’s landfall in the next 24 hours, we’ve outlined several scenarios to illustrate how the insurance and cat bond markets might be impacted,” Icosa Investments explained.

The range of outcomes is broad, from an almost non-event for investors to a major catastrophe with potential losses exceeding $100bn.

Icosa Investments also observed several cat bonds trading in the secondary market at significantly wider spreads than their previous valuations, suggesting a potential additional mark-to-market impact in Friday’s valuation prices.

“For context: Hurricane Ian resulted in around a -10% impact on the Swiss Re Cat Bond Index, while Hurricane Irma, when expected to make landfall in Miami, caused an initial -15% impact before rebounding,” the firm said.

As the above shows, mainline insurance industry losses range from $15bn to $150bn+, with the hit to the cat bond market anything from zero to as much as 15%.

Florian Steiger, CEO of Icosa Investments commented, “With less than 24 hours to Hurricane Milton’s landfall, a wide range of outcomes remains possible. From a major, industry-changing event with widespread effects on cat bond investors to a nearly benign scenario with minimal losses (excluding mark-to-market impacts), everything is still on the table.

“The uncertainty persists, not only about the exact landfall location but also regarding the storm’s intensity at landfall and the extent of the storm surge.

“This makes it impossible to provide any credible point estimate at this stage. Instead, we focus on outlining possible ranges, including scenarios with potentially high impact.”

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