Storm Free Years Bolster FHCF
As with other aspects of the Florida residential property insurance market, the Florida Hurricane Catastrophe Fund (FHCF) continues to benefit from the recent run of hurricane-free years. Not only does the FHCF anticipate that it can fully meet is statutory limit of $17 billion in single-season capacity, most of the the FHCF’s current single-season capacity consists of cash on hand totaling $12.8 billion.
If a hurricane were to affect Florida this year triggering the full limit of FHCF payments, the FHCF could meet its obligations using $12.8 billion of cash on hand, $2.0 billion in existing pre-event notes, $1.0 billion in reinsurance the FHCF seeks to place, and $1.2 billion in additional pre-event notes.
In addition, if a storm were to deplete the FHCF this year, the FHCF expects that it could pay almost $12 billion in claims in the ensuing year (with a shortfall of about $5.3 billion compared to the statutory limit). The subsequent-season capacity would rely heavily on FHCF assessments, which would support the revenue bonds it would need to issue.