FHCF Enters Hurricane Season in Strong Financial Position
The Florida Hurricane Catastrophe Fund (FHCF) begins the 2020 in a strong position to pay reimbursements to insurers if the need arises this year. The FHCF releases estimates of its claims-paying capacity in May and October of each year. The FHCF projects having $11.62 billion of cash on hand plus $650 million in pre-event note proceeds for a total of $12.27 billion in readily available liquid resources. To reach its $17.0 billion in maximum single-season reimbursement capacity, the FHCF would need to borrow $4.73 billion. This is well within the FHCF’s estimated borrowing capacity, which it believes to be about $7.2 billion.
The FHCF elected not to buy private reinsurance this year because there was not an abundance of reinsurance capital available in the market. In addition the effect of higher market prices on its own reinsurance, a large purchase by the FHCF can reduce capacity available for direct writers and further increase market prices.