MultiCat Mexico 2012

Early estimates of insurance and reinsurance industry losses due to hurricane Patricia are in a range of up to $500m, with the eventual total expected to be significantly lower than had initially been expected when Patricia became one of the strongest recorded hurricanes.

The $100m tranche of MultiCat Mexico Ltd. (Series 2012-1) Class C catastrophe bond notes look almost certain to face a loss from the impact of hurricane Patricia yesterday, but the question now, due to the parametric triggers conditions, is how much.

The catastrophe bond market seems to be on the verge of accepting that the $100m of MultiCat Mexico Ltd. (Series 2012-1) Class C catastrophe bond notes are destined for a loss, given hurricane Patricia’s continued approach as a major storm towards the parametric trigger zone.

Hurricane Patricia has intensified rapidly into one of the strongest Category 5 storms on record in the region, threatening a devastating blow to Mexico when it makes landfall late on Friday and with the potential to trigger the MultiCat Mexico Ltd. (Series 2012-1) Class C catastrophe bond notes.

Read our latest on Hurricane Patricia here. Hurricane Patricia formed this morning off the Pacific coast of Mexico. With sustained winds of 85mph currently the forecast calls for Patricia to strengthen towards a Cat 3 or stronger landfall, perhaps putting the Class C notes of the MultiCat Mexico Ltd. (Series 2012-1) catastrophe bond at risk.

Rating agency Standard & Poor’s has now affirmed its rating on the MultiCat Mexico Ltd. (Series 2012-1) Class C catastrophe bond notes and removed them from CreditWatch as hurricane Odile was not a triggering event.

Investors in the MultiCat Mexico Ltd. (Series 2012-1) Class C catastrophe bond notes will not face any loss due to September’s hurricane Odile as calculation made using the latest data from the NHC deems the parametric trigger had not been triggered.

The fate of the MultiCat Mexico Ltd. (Series 2012-1) catastrophe bond, after hurricane Odile threatened to trigger its Class C notes, looks more secure as the official report data from the National Hurricane Center suggests a loss may not be guaranteed.

It’s no surprise to see that rating agency Standard & Poor’s has now placed the $100m MultiCat Mexico Ltd. (Series 2012-1) Class C catastrophe bond notes on CreditWatch with negative implications as they sit at risk of loss due to hurricane Odile.

The fate of the MultiCat Mexico Ltd. (Series 2012-1) catastrophe bond is not as clear-cut as it seems. We understand that investors must wait for confirmed data on hurricane Odile to be released by the National Hurricane Center (NHC) which can take some weeks.