Atlantic Hurricane Season

A number of forecasts have been released for the 2017 Atlantic Tropical Storm & Hurricane Season and so far all are calling for activity levels just below the long-term average, with the expectation that we will see a weak El Niño by the typical peak of the season suggesting a slower year.

Hurricane Otto, the fifteenth named storm and seventh hurricane of the 2016 Atlantic storm season, formed in the Caribbean this week and has intensified into a category 1 storm with sustained winds of 75 mph as it heads for a landfall near the Nicaragua and Costa Rica border.

Risk modelling firm AIR Worldwide has provided its initial estimate of insurance and reinsurance industry losses from hurricane Matthew, putting the figure somewhere in a range from $2.8 billion to as high as $8.8 billion across the United States and the Caribbean.

Updated Oct 13th, 14:00 BST 10:00AST: Hurricane Nicole has remains a very strong Category 3 hurricane, with sustained winds of 125mph and higher gusts, and continues to track towards Bermuda where its large eye is forecast to pass very close to or even over the island.

Insurance and reinsurance sector losses from hurricane Matthew are currently converging on a total impact of around $6 billion, but it is still very early to put a figure on the impact of Matthew given the large area of U.S. coastline affected.

The risk of a major insurance and reinsurance industry loss seems to have decreased with the last few forecast updates for hurricane Matthew, as the path looks more likely to remain offshore of the Florida and southeast U.S. coastline.

Hurricane Matthew has the potential to trigger outstanding catastrophe bonds and other ILS structures, based on latest forecasts, but significant uncertainty remains and exactly how close the storm gets to making landfall could wildly sway the eventual insurance and reinsurance industry loss.

Hurricane Matthew is battering the central Bahamas, with sustained winds of 115mph, higher gusts, torrential rain and a storm surge estimated at anything up to 15 feet. Matthew is then forecast to intensify again and head for Florida, where the outlook is worsening for the state.

Hurricane Matthew has the potential to be a significant loss event for the insurance and reinsurance industry. It could also cause issues to some catastrophe bonds, eroding aggregate retention and increasing their attachment probabilities, according to Ben Brookes of RMS.

The so-called “live cat” market has come to life, albeit perhaps tentatively, as hurricane Matthew’s approach towards the U.S. has increased the certainty of what looks set to be a relatively major impact (at this time) with a number of ILW’s trading and as much as $100m of limit placed, Artemis understands.