Hurricane Milton Could Deplete U.S. Insurers’ Catastrophe Budgets, Global Reinsurers Likely to Endure

Hurricane Milton, poised to make landfall in Florida as a Category 5 storm, marks the second major U.S. hurricane in two weeks. This follows closely after Hurricane Helene and could lead to significant insured losses, with potential effects on both U.S. property/casualty (P/C) insurers and global reinsurers. For U.S. insurers, especially those operating in Florida, Milton’s damage could deplete their 2024 natural catastrophe budgets, which are already stretched by earlier events this year. Although this will affect earnings and underwriting margins, capitalization levels should remain stable.

Global reinsurers, though facing substantial exposure to this event, are not expected to exceed their catastrophe budgets for the year. With combined earnings expected to hold steady and robust capital reserves in place, reinsurers appear resilient, though much depends on the final extent of Milton’s destruction.

Much of Milton’s potential damage remains uncertain, hinging on the storm’s exact landfall and intensity. It is projected to bring significant wind, rain, storm surges, and flooding to the Tampa Bay region. The total insured losses could approach those from Hurricane Ian in 2022, which amounted to about $60 billion. However, reinsurers have bolstered their risk management, and Milton may remain within the sector’s catastrophe tolerance.