Hurricane Milton Threatens Catastrophe Bond Market

Hurricane Milton is projected to cause insured losses between $20 billion and $60 billion, with the catastrophe bond market impact expected to remain below 5%, according to Icosa Investments. The potential losses could vary widely, with estimates ranging from $15 billion to over $150 billion depending on the storm's severity and landfall location. Investment firms like Plenum Investments anticipate that losses may equate to those from Hurricane Ian, around $50 billion, but the overall impact on catastrophe bonds will be moderate and manageable within the strong returns seen this year. As the storm nears Florida, fund managers are proactively exploring options to liquidate positions to prepare for possible losses. Despite the uncertainty, the cat bond market's dynamics are being closely monitored as the season progresses, with elevated premiums likely in the aftermath of Milton. The overall sentiment indicates a cautious optimism, with investors awaiting more precise data post-landfall.