The U.S.Federal Emergency Management Agency’s (FEMA) has updated its estimate for National Flood Insurance Program (NFIP) losses from hurricane Helene, stretching the top-end of the range to now as much as $7.4 billion.Initially, FEMA’s estimate for NFIP claims from hurricane Helene’s flooding was .Then in January, Artemis revealed that sources had said , as a result of which two FloodSmart Re catastrophe bond tranches had their maturity dates extended, with partial repayments of principal set to be made.

Now, in an update yesterday, FEMA has said that the NFIP has received 57,400 flood insurance claims from hurricane Helene, totalling more than $4.5 billion as of February 6th 2025.Based on data as of January 31st, FEMA said the estimated range for total losses paid in to the NFIP from Helene is for between $6.4 billion and now as high as $7.4 billion.With maturity extensions related to the cat bond issuance from February 2022 already in place and the $6.75 billion figure already indicating the potential for some small losses to one of the FloodSmart Re catastrophe bond tranches, while also nearing the attachment point for FEMA’s traditional flood reinsurance program, the extension of the top-end of the range to as high as $7.4 billion suggests the possibility of the cat bonds facing additional 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 around the $6.52 billion level, while the $100 million Class B tranche of the FloodSmart Re 2022-1 cat bond have an attachment at around the $7.4 billion mark.So depending on how high in the $6.7 billion to $7.4 billion estimated range the ultimate NFIP losses from hurricane Helene rise to, the Class C notes could face a larger loss, while the Class B notes now look a little more at-risk should the estimate fall above the latest range.It’s worth also noting that another cat bond in the series, the deal, has a $50 million Class B tranche of notes that had an initial attachment point at $7 billion of NFIP losses from a named storm related flood event.

While we do not know where the latest attachment point is post-reset, if it remains close to the initial level this tranche could also be exposed to any loss creep from Helene.It does seem, with a higher top-end now to the estimate range for Helene, that the FloodSmart Re cat bonds which are exposed face a growing chance that some principal losses may occur.In addition, the NFIP’s traditional reinsurance tower for calendar year 2024 provides it with above a $7 billion attachment point, so again this may be considered at-risk.

FEMA also said yesterday that the NFIP has now received more than 21,100 flood insurance claims from hurricane Milton totalling more than $740 million as of February 6th 2025.The estimated range for losses paid for Milton is between $1.2 billion and $2.9 billion based on January 31st data.Given the significant hurricane related flood insurance claims from the 2024 season, the agency said, “FEMA has exercised its borrowing authority under the National Flood Insurance Act of 1968 to borrow $2 billion from U.S.

Treasury to pay eligible National Flood Insurance Program (NFIP) policyholder claims.“The NFIP is not designed to pay for multiple catastrophic events in a single year without additional financial assistance.The combined 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 in 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 financial effects flooding can have not just to survivors but also the National Flood Insurance Program.We are strategically utilizing short-term borrowings in 60-day increments, demonstrating our careful and responsible management of the borrowing authority,” commented Elizabeth Asche, Ph.D., Senior Executive of the National Flood Insurance Program.

“Despite these challenges, the NFIP remains unwavering in its commitment to fully pay every claim and ensure policyholders receive the compensation they are owed for eligible flood-related losses.” Recall that, , securing 22% more in protection for this calendar year, at just over $757.8 million.Read all about FEMA’s ...

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