PARIS (Reuters) – Hurricane Milton could exceed $60 billion in insured losses and weigh on the results of European reinsurers, particularly those of Scor, analysts at Barclays estimate in a note published on Tuesday.

Downgraded to category 4, Hurricane Milton is expected to hit the state of Florida on Wednesday, where more than a million people have been ordered to evacuate.

“Milton could be one of the most destructive hurricanes ever recorded in west-central Florida,” warned the United States National Hurricane Center (NHC), which predicts that the storm will land near the Tampa Bay metropolitan area with more than three million residents.

“With the predicted track toward the highly populated Tampa-St. Petersburg region, we see the potential for a devastating storm that could surpass Hurricane Ian,” Barclays analysts said.

Hurricane Ian swept across Florida at the end of September 2022, causing $60 billion in insured losses and ranking as the second costliest hurricane in history for the sector, according to the Swiss Re Institute.

Barclays analysts nevertheless point out that the range of potential losses remains wide, from $10 billion to more than $100 billion.

The large European reinsurers, to whom insurers cede a significant part of their risks, will take a significant part of the losses linked to this natural disaster.

While Munich Re, Hannover Re and Beazley are well placed thanks to their high reserves or low exposure, Scor and Swiss Re could be particularly exposed to a $50 billion to $100 billion shock to the sector, Barclays analysts estimate.

According to their calculations, Scor’s pre-tax profit in 2024 would be most burdened by losses of $75 billion caused by Hurricane Milton with a result that would fall into the red.

The French reinsurer, which posted a solvency ratio of 201% in the first half, could even see this ratio exceed its lower limit of 185% in the event of a loss of around $75 billion coupled with the fall in rates and the review of its life and health activities announced in the first half, again according to Barclays.

Scor, which had recorded a net retrocession charge of 275 million euros at the end of 2022 for Hurricane Ian, posted a combined ratio in its property and casualty activities of 87% in the first half of 2024 including a charge linked to natural disasters amounting to at 8.6% of net insurance income, below the 10% budget.

Hurricane Helene, which swept the southeast coast of the United States at the end of September, is already expected to cost the sector between $10.5 billion and $17.5 billion, with CoreLogic having raised its range of insured losses on Tuesday.

Contacted by Reuters, Scor declined to comment. The reinsurer has been engaged for several years in reducing its exposure to natural disasters.

(Written by Bertrand De Meyer, edited by Blandine Hénault)

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