Hurricane Milton is not likely to affect credit for rated property/casualty insurers and global reinsurers given very strong capital levels, Fitch Ratings said its its latest release. However, Florida’s property insurance specialists, which Fitch does not rate, are vulnerable to the extent the major hurricane generates losses over reinsurance limits.
Hurricane Milton will push global industry insured losses thus far in 2024 to over $100 billion, which is the fifth consecutive year losses have crossed this threshold. This high level of catastrophe losses will likely limit any potential for rate declines in property catastrophe business in 2025 as (re)insurers maintain underwriting discipline, said Fitch.
The report added that Florida’s property experienced flat to 10 percent rate declines at June/July 2024 reinsurance renewals, reflecting the limited impact of the 2023 hurricane season.
“We estimate Milton’s insured losses will range from $30 billion-$50 billion, the largest insured loss since Hurricane Ian ravaged a similar path in 2022 and caused $60 billion of losses,” added Fitch.
Hurricane Milton will impact 4Q and 2024 earnings for large-rated insurers with Florida exposure. Fitch explained that the insurance losses will hit reinsurance attachment points, shifting significant losses to the reinsurance market, particularly from the Florida specialist companies with lower retentions.
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The report added that the property market could see an increase in premium rates, depending on the ultimate Milton losses and the amount of additional catastrophe losses for the remainder of 2024. However, the surge in property reinsurance prices in 2023 is unlikely this year given the more adequate current pricing environment.
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