Hedge funds bought reinsurance stocks in the third quarter after prices tumbled on widespread losses after multiple hurricanes in North America, filings showed on Wednesday.

Hurricanes in the United States and the Caribbean in August and September are expected to cause at least $100 billion in insured losses, reinsurers and risk-modeling agencies have said. This far exceeds losses of about $74 billion caused by Hurricane Katrina, which hit New Orleans in 2005.

Reinsurance rates are likely to rise at January 2018 renewals as a result of increased demand, boosting profitability and driving the hedge fund interest.

The sector is looking “quite an interesting place to be,” said Nick Martin, manager of Polar Capital’s $1.3 billion insurance long-only fund, adding that years of falling rates have driven down valuations.

“It’s not a surprise that the savvy hedge funds are reassessing the sector.”

Polar Capital’s hedge fund business bought into some reinsurance stocks in the third quarter, including Validus Holdings, according to Symmetric-compiled data from U.S. Securities and Exchange Commission filings.

Although reinsurance stocks were down across the whole of the quarter, they rallied by between 5 percent and 20 percent in the last few weeks of the period.

Hedge funds bought 2.44 million Validus shares, equating to 3.3 percent of its stock, in the third quarter, bringing the industry’s total ownership to 14 percent, the Symmetric data showed.

Managers with strategies ranging from event-driven to technologies-focused to computer-driven added 1.5 percent of RenaissanceRe Holdings shares, bringing total ownership to 10 percent, according to the data.

Hedge funds also bought 628,000 shares in XL Group, 528,000 shares in Chubb, 307,000 in Everest Re and 225,000 shares in Aspen Insurance Holdings.

“Reinsurance has historically been a good uncorrelated strategy that has generated equity-like returns with fixed-income-level risk,” said Kevin Lenaghan, a managing director on the hedge fund team at investment consultant Cliffwater.

“While the strategy can also be cyclical, multiple recent hurricanes and insurancecompany losses have improved the opportunity set. We believe that this may be a good time for investors to consider a reinsurance allocation.”

In addition to the hurricanes, earthquakes in Mexico and wildfires in California mean that 2017 could be the worst year on record for insurance losses.

Munich Re and Swiss Re, the world’s biggest reinsurers, have said they expect reinsurance rates to rise, with Swiss Re seeing rates rising by up to 50 percent in disaster-hit areas.

Among hedge fund goliaths betting on a recovery for reinsurance stocks were Britain’s Marshall Wace, U.S. duo Marathon Asset Management and Balyasny Asset Management.

All declined to comment or did not respond to requests for comment. (Additional reporting by Svea Herbst-Bayliss.)

Topics Catastrophe USA Reinsurance Hurricane