Peter Clarke, President and COO of Fairfax Financial Holdings, indicated that expected catastrophe losses from Hurricane Milton in the fourth quarter should fall within the company’s normal margin for such expenses.
While an exact figure remains uncertain due to the slow arrival of claims, Fairfax has handled annual catastrophe losses exceeding $1 bn in recent years.
Fred Karlinsky, chair of Greenberg Traurig’s Insurance Regulatory and Transactions Practice Group, suggested that Milton could be a retention event for Florida insurers and might impact business prospects.
We believe it will easily come within the cat margin for the fourth quarter. Hurricane Milton was significant, and if it had struck Tampa, the outcome would have been different
Peter Clarke, President and COO of Fairfax Financial
He added that the impact on the combined ratio should be minimal. Although the third quarter had several hurricanes, major population centers in Florida were largely spared.
Clarke’s remarks were part of Fairfax’s third-quarter earnings presentation, emphasizing underwriting profitability as a key focus. Fairfax reported a slight decline in net earnings attributable to shareholders, down to $1.03 bn from $1.07 bn in the third quarter of 2023.
The storm’s path made loss assessments more complex, with insured losses potentially reaching tens of billions, according to Aon. Nevertheless, some damage estimates remain below initial expectations.
Hurricane Milton is not likely to affect credit for rated property and casualty insurers and global reinsurers given very strong capital levels. However, Florida property insurers are vulnerable to the extent the major hurricane generates losses in excess of reinsurance limits.
According to Fitch Ratings, Milton made landfall near Siesta Key, FL as a Category 3 hurricane and traveled across central Florida before moving off the east coast as a Category 1 storm. It has caused considerable economic and insured losses from high winds, substantial storm surge, heavy rainfall, tornadoes and flooding.
We estimate Milton’s insured losses will range from $30-50 bn, the largest insured loss since Hurricane Ian ravaged a similar path in 2022 and caused $60 bn of losses.
Hurricane Milton will be a 4Q and 2024 earnings event for large rated insurers with Florida exposure. The insurance losses will hit reinsurance attachment points, shifting a meaningful amount of losses to the reinsurance market, particularly from the Florida specialist companies with lower retentions.
Hurricane Milton, the 13th named storm of the Atlantic season, made landfall at Siesta Key, Florida, on Oct. 9 as a Category 3 hurricane with sustained winds of 120 mph. Aon noted it had rapidly intensified to Category 5 strength before landfall, becoming one of the most powerful hurricanes ever recorded in the North Atlantic basin.
Economic and insured losses from Hurricane Milton remain uncertain, Milton is the second major storm to hit the U.S. within two weeks, following Hurricane Helene.
Hurricane Milton is anticipated to be one of the most powerful and economically detrimental hurricanes to make landfall in the western region of Florida. Beinsure Media analysts reviewed S&P report and catastrophe modeling companies’ forecasts regarding the potential losses from Hurricane Milton and present a review on the Milton’s impact on major Florida’s insurance companies and the global reinsurance sector.
Due to the uncertainty around the scale of losses, S&P Global is analyzing several industry loss scenarios and their potential effects on U.S. insurers. For context, Hurricane Ian, a Category 4 storm that hit Florida in 2022, led to insured losses of about $60 bn.
