RBC Capital analysts report that Hurricane Milton could result in a $60 billion loss for the global insurance industry, potentially driving up reinsurance prices in 2025. This scenario could benefit some insurance companies' stock prices. The hurricane is expected to land on the Gulf Coast of Florida, bringing with it severe weather conditions that could make it one of the most destructive in the region's history. This comes as the area is still recovering from damage caused by Hurricane Helene less than two weeks ago.
The projected $60 billion loss is comparable to the damages inflicted by Hurricane Ian in 2022 in Florida. However, analysts believe that the estimated losses from Hurricane Milton are "very manageable" for the insurance sector. In recent years, insurance and reinsurance companies have responded to rising losses from natural disasters by increasing rates and excluding high-risk business. RBC Capital notes that improved reinsurance contract terms, diverse profitability, and higher reserve buffers should leave the industry in a better position than before.
This week, shares of global reinsurance companies such as Swiss Re, Munich Re, and Lloyd's of London's subsidiaries Beazley, Hiscox, and Lancashire have been declining. RBC Capital analysts suggest that these stocks are likely to recover in due course.
