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Hurricane Ian Threatens Heavy Losses on Catastrophe Bond Holders

Sept. 29, 2022, 4:28 PM

Investors who backstop Florida’s insurance industry by buying catastrophe bonds are girding for substantial losses from Hurricane Ian, threatening to crimp a key source of capital for the sector and push up insurance costs for residents.

Ian’s landfall hammered Florida with heavy winds and historic floods. On top of the humanitarian toll, that could mean big losses to investors in cat bonds, which can be wiped out by an extreme-weather event. In turn, this could exacerbate an already tortured insurance market where homeowners are being crushed by higher costs and the state’s providers are having second thoughts.

“The scale of ...