SFA Research Corner: Natural Disasters and Their Impact on Securitization
article by Structured Finance Association
Hurricanes Helene and Milton recently highlighted the significant impact natural disasters can have, with damages estimated up to $47.5 billion and $34 billion, respectively. In securitizations, secured assets, such as mortgages and auto loans, can suffer from damaged collateral, while unsecured assets like personal loans see increased delinquencies due to borrower financial hardship. Insurance protections, geographic diversification, internal credit enhancements, and data-driven risk assessments are essential strategies for mitigating these risks and maintaining cash flow stability in securitizations.