After evaluating improved market conditions, the Florida Hurricane Catastrophe Fund (FHCF) is looking to secure $1 billion of reinsurance protection at the mid-year renewals, at a preliminary attachment point of $10.5 billion.
Following the impacts of hurricane Irma in 2017, it appears the FHCF is looking to adjust its financing for the 2018/2019 year. The Fund recently announced that it’s targeting $1 billion of protection through traditional reinsurance, the same amount it secured in both 2016 and 2017, but at a lower attachment than previous years, at $10.5 billion.
In contrast, the $1 billion of reinsurance cover secured in 2016 and 2017 attached at $11.5 billion, which itself was a decline from the $12.5 billion attachment point it secured for its 2015 risk transfer, which again totalled $1 billion.
While the size of its reinsurance coverage has remained the same since 2015, the cost of securing its placement declined year-on-year, so it will be interesting to see if this trend continues for its 2018 placement in light of 2017 catastrophe events.
As shown by the above image depicting the Fund’s financing tower, the $1 billion of risk transfer is expected to sit in the middle of its year-end balance.
The tower also shows that despite expected overall losses of $2.04 billion from hurricane Irma, it’s expected to enter the 2018 hurricane season with more ground-up resources than the previous year.
With expected cash funding of $14.1 billion, $1 billion of reinsurance cover and $2.2 billion of bonding carried over from prior years, the Fund will go into the 2018 hurricane season with more than the statutory $17 billion limit it has to meet.
