Investors in catastrophe bonds have faced far lower losses than anticipated following Hurricane Milton’s landfall as a Category 3 storm, which resulted in estimated insured losses ranging between $20 billion and $60 billion. Initial forecasts predicted bond losses up to 15%, but revised calculations suggest a maximum hit of only 4%. The event’s impact on the cat-bond market is significant, as it contrasts with the record gains of 20% witnessed in 2023, demonstrating the volatility associated with risks from natural disasters. Nonetheless, prevailing high-risk premiums may offer attractive opportunities for investors in the cat bond market moving forward.
