Last week I ruminated on the possible impact of Hurricane Harvey on the share price of Catco reinsurance – you can see it here Almost immediately after my blog came out, the share price of this fascinating fund shot up. Clearly, investors were calmed by a statement from the fund that losses might not be huge. At one point they were up at $1.28.

But within a few days the rot set in. First the disaster hitting Houston became ever more obvious. And then we had Hurricane Irma quite literally flattening poor old Barbuda. Not unsurprisingly the share price of the fund has now headed into reverse – as I predicted, crashing below my predicted $1.15 level to hit the current $1.13. My original, back of the fag packet, analysis was that a 10% hit to the share price was sensible. But Irma has changed that. Depending on its impact on Florida, this major wind event could start to push those catastrophe losses much, much higher. My bearish estimate is that we could see the share price head as low as $1.05, especially if Southern Florida takes the full brunt of those 200 mph winds.

But there is a silver lining in this terrible story. In fact, two.

The first is that the penny is finally dropping that maybe there is a structural vector at work here – increasing average temperatures from climate change. I absolutely wouldn’t say global warming has any direct impact on the frequency of these horrible storms, but I would suggest that the consensus is that warming is making matters worse. And that horrible realization must begin to have an effect on the re insurance market, pushing up premiums. Without wanting to sound mawkish, most insurers now have the best excuse ever to justify an increase in premiums – its global warming and someone has to pay for it!

My other observation is that the US press is full of stories about the huge cost to the public purse from these wind and flooding events. Pressure is building to change construction regulations so that something is done to improve resilience – a start might be NOT building in obvious flood plain areas. The US media is awash (!) with stories of multiple claims against the US government from the same dwelling. Clearly, something has gone terribly wrong in the US and far too many properties are being built in areas where they shouldn’t. Again, this focus on resilience and better public infrastructure planning might help reduce future losses.

So, in sum, once the clean up after these two hurricanes gets under way we may see a brighter picture for re insurance. But in the meantime, I’d wager that the financial bill will be much higher than we all think – which will weigh on CatCo’s share price. But the stock market might over react, opening up a good opportunity to get back into the fund’s share price. On a broader point, hopefully, more and more investors and policy makers will begin to think long and hard about improving societal resilience to global warming impacts. Sure, cut carbon emissions but be aware that too much damage has already been done and we need to manage future extreme weather events.