FHCF lowers Milton and Helene loss estimates to $3.01 billion

By David Bull

May 14 - (The Insurer) - The Florida Hurricane Catastrophe Fund has further reduced its projected ultimate total incurred loss from Hurricane Milton to $3.0 billion, with just a $10 million loss from Hurricane Helene.

The state’s cat fund, which provides reinsurance to Florida’s homeowners insurance market, had initially put up a projected range of losses from the two storms of between $1.6 billion to $6.2 billion last November, with a point estimate of $4.6 billion.

That was then reduced to a combined loss estimate of $3.41 billion, with the lion’s share relating to Milton at $3.40 billion, out of projected industry losses of $11.36 billion for Milton and $1.72 billion for Helene, as at February 28 this year.

In a board meeting presentation Monday, May 12, the projected industry ultimate total incurred loss for Milton increased to $11.76 billion and narrowed to $1.05 billion for Helene.

But the FHCF share of the Milton loss dropped to $3.00 billion, with the Helene projection unchanged from the previous disclosure.

The cat fund has also lowered its estimate for 2023 storm Hurricane Ian from $9.00 billion for the FHCF to $8.5 billion, out of a projected industry ultimate total incurred loss of $20.07 billion.

The lower loss estimates for last year’s storms are in line with those seen in the private market, a trend that has been attributed to the legislative reforms of recent years that have curbed some of the inflationary drivers of claims in the Sunshine State.

The latest presentation at this week’s FHCF board meeting also included the 2025/2026 contract year preliminary estimates for funding its $17 billion capacity, with the projected year-end 2025 balance adjusted for the latest estimates for Hurricanes Ian, Idalia, Helene and Milton.

It includes the higher projected industry retention in this year’s structure of $11.3 billion and a further $2.8 billion of industry co-payments, along with a $6.72 billion projected year-end fund balance.

The cat fund would then have access to $2.25 billion of Series 2020A pre-event bonds, $1.0 billion of Series 2024A pre-event bonds, and would need to secure $7.03 billion of post-event bonds in the event of a storm that maxed out its $17 billion claims paying capacity.

Going into last year’s hurricane season, which officially starts on June 1, the FHCF’s $17 billion capacity was funded by a structure that included a lower $9.9 billion industry retention, $2.3 billion of industry co-payments and a $6.91 billion projected 2024 year-end balance.

The pre-event bonding was in line with this year’s projections, which would have left the cat fund needing to secure $6.84 billion of post-event bonding.

As previously reported, the higher retention on the FHCF this year is fuelling additional demand from Florida homeowners carriers for private market limit below the cat fund, which is expected to have the effect of slowing rate reductions in those lower layers at the upcoming June 1 renewal.