Dear Investors
Hurricane «Milton», which has now subsided after making landfall as a powerful category 3 storm with windspeeds of 195km/h on Florida’s west coast near Siesta Key in Sarasota County on Thursday, brought damaging widespread wind, storm surge and tornado damage to central and southern Florida. «Milton» disrupted the power supply for over 3.3 million people and downed trees and damaged buildings. Loss assessments are just beginning but it seems that the damage is less severe than initially feared. First indications of probable insured industry losses estimate that losses from «Milton» will be below those of hurricane «Ian» of 2022.
We have received the first post-landfall event set for «Milton» and modelling our funds resulted the following expected losses, which continue to be marginal and are also lower than our initial pre-landfall estimates:
• Plenum CAT Bond Defensive Fund: -0.2%
• Plenum Insurance Capital Fund: -0.4%
• Plenum CAT Bond Dynamic Fund: -0.7%.
These post-landfall estimates are only a preliminary view and include only losses caused by wind. As mentioned in our fist newsflash for «Milton», we expect the market reaction to exceed the modelled expected loss results. The initial mark-downs incorporate the uncertainty around the final outcome, which will take time to assess as insurance claims come in. Based on the broker pricing indications, we estimate the impact before accrued coupon income and costs on the NAVs of our funds to be:
• Plenum CAT Bond Defensive Fund: -48bps
• Plenum Insurance Capital Fund: -85bps
• Plenum CAT Bond Dynamic Fund: -120bps
Every loss withdraws risk-bearing capital from the market and reduces reinsurance capacity, which is why an increase in premiums is usually observed after significant events. The extent of this increase depends, among other things, on the final claims and is therefore difficult to estimate, but risk premiums in the CAT bond market are likely to increase again, although they are already at a historically high level.
This will probably be our last communication on Hurricane Milton, unless significant additional information emerges that would materially change our assessment of this event.
Kind regards
Your Plenum-Team
Der Beitrag NewsFlash II: Hurricane “Milton” I Category 3 I Post-Landfall erschien zuerst auf Plenum Investments.
