After counting the cost of potential losses in the aftermath of Hurricane Ian, which slammed into Florida's west coast, the structured finance industry estimated that the catastrophe bond and insurance-linked note could experience between $25 billion and $40 billion range.
This is based on early estimates of economic losses exceeding $50 billion, considering a storm path similar to that of Hurricane Charley, plus the higher population and population values in Southwest Florida, according to Morningstar | DBRS.
"In light of the damage already caused by Hurricane Ian, insurance claims are likely to cause substantial losses for property and casualty insurers exposed to the notoriously challenging Florida market," according to a commentary from DBRS authored by Patrick Douville, vice president of insurance and Marcus Alvarez, senior vice president and head of insurance, both of the Global Financial Institutions Group.
As for the commercial mortgage-backed securities (CMBS), Fitch Ratings noted that of the $39 billion in CMBS under its review between exposures to hurricanes Ian and Fiona, it does not expect the effects of the storm to affect the ratings.
"Losses would be mitigated by servicer advancing, insurance typical of CMBS loans and strong sponsorship among the larger exposures," according to a note from the rating agency.
More than 75% of the total exposure by balance is concentrated among multifamily (35%), retail (21%) and hotel (19%) assets, the rating agency said. Office properties account for 10% of the total exposure, and industrial another 4%, rounding out the top five property types.
A majority of the exposure to Hurricane Fiona is to retail assets, including the Las Catalinas Mall, the rating agency said.
