The U.S. Federal Emergency Administration Company’s (FEMA) has up to date its estimate for Nationwide Flood Insurance coverage Program (NFIP) losses from hurricane Helene, stretching the top-end of the vary to now as a lot as $7.4 billion.
Initially, FEMA’s estimate for NFIP claims from hurricane Helene’s flooding was put in a range from $3.5 billion to as much as $7 billion back in November 2024.
Then in January, Artemis revealed that sources had stated the NFIP’s estimate for losses paid after hurricane Helene’s devastating coastal and inland flooding was pegged at $6.75 billion, because of which two FloodSmart Re disaster bond tranches had their maturity dates prolonged, with partial repayments of principal set to be made.
Now, in an replace yesterday, FEMA has stated that the NFIP has obtained 57,400 flood insurance coverage claims from hurricane Helene, totalling greater than $4.5 billion as of February sixth 2025.
Primarily based on knowledge as of January thirty first, FEMA stated the estimated vary for whole losses paid in to the NFIP from Helene is for between $6.4 billion and now as excessive as $7.4 billion.
With maturity extensions associated to the FloodSmart Re Ltd. (Series 2022-1) cat bond issuance from February 2022 already in place and the $6.75 billion determine already indicating the potential for some small losses to one of many FloodSmart Re disaster bond tranches, whereas additionally nearing the attachment level for FEMA’s conventional flood reinsurance program, the extension of the top-end of the vary to as excessive as $7.4 billion suggests the potential of the cat bonds going through extra principal erosion.
Recall that, the riskiest layer of the FloodSmart Re 2022-1 cat bond is the $25 million Class C tranche of notes, which have an attachment at across the $6.52 billion stage, whereas the $100 million Class B tranche of the FloodSmart Re 2022-1 cat bond have an attachment at across the $7.4 billion mark.
So relying on how excessive within the $6.7 billion to $7.4 billion estimated vary the last word NFIP losses from hurricane Helene rise to, the Class C notes may face a bigger loss, whereas the Class B notes now look slightly extra at-risk ought to the estimate fall above the newest vary.
It’s price additionally noting that one other cat bond within the collection, the FloodSmart Re Ltd. (Series 2023-1) deal, has a $50 million Class B tranche of notes that had an preliminary attachment level at $7 billion of NFIP losses from a named storm associated flood occasion. Whereas we have no idea the place the newest attachment level is post-reset, if it stays near the preliminary stage this tranche is also uncovered to any loss creep from Helene.
It does appear, with a better top-end now to the estimate vary for Helene, that the FloodSmart Re cat bonds that are uncovered face a rising probability that some principal losses might happen.
As well as, the NFIP’s conventional reinsurance tower for calendar yr 2024 gives it with $619.5 million in coverage above a $7 billion attachment level, so once more this can be thought-about at-risk.
FEMA additionally stated yesterday that the NFIP has now obtained greater than 21,100 flood insurance coverage claims from hurricane Milton totalling greater than $740 million as of February sixth 2025. The estimated vary for losses paid for Milton is between $1.2 billion and $2.9 billion based mostly on January thirty first knowledge.
Given the numerous hurricane associated flood insurance coverage claims from the 2024 season, the company stated, “FEMA has exercised its borrowing authority beneath the Nationwide Flood Insurance coverage Act of 1968 to borrow $2 billion from U.S. Treasury to pay eligible Nationwide Flood Insurance coverage Program (NFIP) policyholder claims.
“The NFIP just isn’t designed to pay for a number of catastrophic occasions in a single yr with out extra monetary help. The mixed losses from 2024 have depleted the NFIP’s funds generated from premiums to pay claims.
“FEMA’s borrowing authority is $30.425 billion, of which FEMA has already borrowed $20.525 billion within the aftermath of hurricanes Katrina, Sandy and Harvey between 2005-2017. The debt is now $22.525 billion.”
“The widespread, devastating flooding following hurricanes Helene and Milton reemphasizes the monetary results flooding can haven’t simply to survivors but additionally the Nationwide Flood Insurance coverage Program. We’re strategically using short-term borrowings in 60-day increments, demonstrating our cautious and accountable administration of the borrowing authority,” commented Elizabeth Asche, Ph.D., Senior Government of the Nationwide Flood Insurance coverage Program. “Regardless of these challenges, the NFIP stays unwavering in its dedication to completely pay each declare and guarantee policyholders obtain the compensation they’re owed for eligible flood-related losses.”
Recall that, FEMA renewed the National Flood Insurance Program’s (NFIP) traditional reinsurance tower for 2025, securing 22% extra in safety for this calendar yr, at simply over $757.8 million.
Learn all about FEMA’s NFIP catastrophe bonds under the FloodSmart Re series of deals.
