live cat

The insurance-linked securities (ILS) industry and third-party reinsurance capital providers recognised that hurricane Florence would not be a market-changing event and reacted accordingly.

The impact to insurance and reinsurance interests from the wind and storm surge damage caused by hurricane Florence is estimated to be in a range from $1.7 billion to as much as $4.6 billion, by AIR Worldwide.

Activity in the market for live cat (live catastrophe) trading and protection buying was lighter for hurricane Florence than other recent storms, in terms of volume traded, but some ILW trades were completed as the storm approached.

Catastrophe risk modelling specialist Karen Clark & Company (KCC) has launched a new product designed to allow re/insurers to track potential claims and losses from hurricanes in real-time, while allowing them to analyse key exposure metrics.

Risk trading based on industry loss triggers linked to hurricane Harvey’s eventual insurance and reinsurance industry toll continued last week, with so-called “dead cat” trades taking place and the focus of counterparties shifting to higher levels of loss.

Catastrophe bond fund managers are not anticipating any loss to their investment holdings due to hurricane Harvey, although the mark-to-market impact witnessed in recent days could cause a limited hit to net asset values as cat bond positions thought most at risk of a major Harvey hit recover.

Risk modelling firm AIR Worldwide has estimates that wind and storm surge damage related insurance industry losses from hurricane Harvey will range from $1.2 billion up to $2.3 billion, a figure set to fall far below the final flood related economic and even insured loss tally.

The catastrophe bond market dropped on Friday as hurricane Harvey approached the Texas coastline, reflecting a little nervousness among investors regarding a few outstanding cat bonds that were deemed the most exposed to the storm, based on the forecasts at the time.

The so-called “live cat” market came to life as hurricane Harvey approached the Texas coastline, eventually making landfall as a Category 4 storm, as re/insurers and some ILS funds looked to lock in last-minute protection and we understand that a number of ILW’s traded, but volume was relatively light, according to sources.

The insurance industry loss from cyclone Debbie has continued to rise, with data from the Insurance Council of Australia (ICA) showing that almost AU$900 million of insured losses have now been recorded from 56,135 claims, an increase of 36% since the 11th April.