Not many people are happy to divulge their predictions for the Atlantic Tropical Storm season so far ahead, and it’s rare to get a glimpse into the prospects for hurricanes this far in advance. Tropical Storm Risk, Aon Benfield Re’s tropical storm research division have released their 2009 storm season prediction already.
The TSR forecast anticipates another active season with activity forecast to be 35% up on the norm. While it’s difficult to be accurate this far out and TSR themselves admit as much in their publication, they usually aren’t too far off the mark.
So, what does this bode for the year ahead for reinsurers. Rising rates, heavy losses incurred in 2008, the collapse of financial markets past it’s worst and new focus being placed on uncorrelated investments by hedge funds could all equal an increase in interest on capital market risk transfer mechanisms such as catastrophe bonds. It’s too early to say how this will play out but with cat bond deals sitting in the pipeline and ready to go (according to industry sources) it won’t take much to spark issuance once the worst of the current economic woes are passed.
Read the full report from Tropical Storm Risk here (in Adobe PDF format).