((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
*
Milton’s loss could reach $100 billion, which would match Katrina
*
Possible $60 billion loss would be similar to Ian’s
*
Reinsurance rates could rise and boost stocks
(Rewritten paragraph 1, added Morningstar DBRS to paragraph 3) by Carolyn Cohn and Noor Zainab Hussain
Hurricane Milton could cause losses of up to $100 billion for the global insurance industry, creating a surge in reinsurance prices in 2025 that could boost shares of some insurance companies, analysts said. analysts on Wednesday.
The Category 5 hurricane is expected to make landfall on the Florida Gulf Coast late Wednesday or early Thursday. It could be one of the most destructive to hit the region, which is recovering from the devastation caused by Hurricane Helene less than two weeks ago.
According to analysts at Morningstar DBRS, insured losses from Milton could be between $60 billion and $100 billion if the hurricane directly hits the densely populated Tampa area.
A $100 billion loss would put Milton on par with Katrina in 2005, they added, noting that insured losses would likely be “substantial but not catastrophic.”
Katrina caused the largest insured loss from a hurricane.
Coming in second is Ian, which hit Florida in 2022 and caused losses of around $60 billion.
RBC analysts believe Milton will result in losses similar to Ian’s, but which should be “very manageable” for the insurance industry.
Jefferies analysts estimated that a major hurricane in one of Florida’s most populated areas would result in insured losses in the double-digit billion range.
“Some estimate that a 1 in 100 year event would result in losses of $175 billion for the Tampa area and $70 billion for the Ft Myers area,” they wrote in a memo
INDUSTRY RESPONSE
Insurers and reinsurers – who insure insurers – have responded to rising losses from natural disasters, which scientists say are exacerbated by climate change, by raising rates and excluding high-risk business.
“Better conditions for reinsurance contracts, greater income diversification and larger reserves should put the sector in a better position than before,” RBC analysts said in a note.
The actions of global reinsurers Swiss Re SRENH.S and Munich Re MUVGn.DE and players at Lloyd’s of London
SOLYD.UL Beazley
BEZG.L
, Hiscox
HSX.L
et Lancashire
LRE.L fell this week. Swiss Re, Munich Re and Beazley have hit record highs in recent weeks following strong profits.
“It is only a matter of time before stocks regain lost ground as the prospects of tighter pricing in subsequent policy renewals () take hold,” RBC added.
Reinsurers set prices for many insurance contracts on January 1st.
Peel Hunt analysts said Wednesday that a major hurricane making landfall in Tampa Bay and moving west across the Florida peninsula would be similar to a realistic disaster scenario drawn up by Lloyd’s earlier this year , which predicted a loss of $134 billion for the insurance industry.
Lloyd’s maintains a set of mandatory realistic disaster scenarios to test individual syndicates and the market as a whole. Event scenarios are regularly reviewed to ensure that they represent significant disaster risks.
Related News :