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Original Risk: A Society for Change Agents

Hawaii facing consecutive hurricanes Madeline & Lester


The Big Island of Hawaii is set to face impacts from two hurricanes in a matter of days, as hurricane Madeline is set to strike the island this evening and hurricane Lester barrels towards making a closest pass to the island this weekend.

Hawaii has reasonably high insurance penetration, meaning that some reinsurance companies would be exposed to any hurricane hit on the islands and raising the prospects that ILS funds could find themselves exposed if either of these storms had a heavy impact on Big Island.

Hurricane Madeline is closest to Hawaii at this time, with a landfall on Big Island possible this evening. Currently hurricane Madeline has maximum sustained winds of 90mph, a minimum central pressure of 980mb and is moving towards Hawaii at 12mph.

Hurricane Madeline forecast path or track

Hurricane Madeline forecast path or track

The hurricane-force winds of Madeline extend outward up to 25 miles (35 km) from the center and tropical-storm-force winds extend outward up to 125 miles, meaning that even a glancing blow could see damaging wind speeds across Hawaii’s Big Island.

Hurricane Madeline is not expected to strengthen, in fact weakening is more likely, although Madeline is expected to sustain category 1 hurricane status as it approaches Hawaii.

Hurricane force winds, torrential rain of up to 4 inches locally, a storm surge of 1 to 3 foot and dangerous surf are all expected to impact Hawaii’s Big Island as Madeline passes by.

Meanwhile, category 4 and much stronger hurricane Lester follows on behind, targeting Hawaii’s Big Island again for this weekend. Currently hurricane Lester has sustained winds of 140mph, a minimum central pressure of 948mb and is moving west at 12mph towards Hawaii.

Hurricane Lester forecast track or path

Hurricane Lester forecast track or path

Lester’s hurricane-force winds extend outwards up to 35 miles (55 km) from the center and tropical-storm-force winds extend outward up to 90 miles (150 km).

Some weakening is anticipated over the next few days as Lester approaches Hawaii, but the storm is forecast to maintain hurricane strength meaning that Hawaii could face two spells of hurricane force winds and associated impacts in just a few days. The track forecast for Lester suggests the hurricane may miss Big Island, but it’s worth being aware of this storm following Madeline.

With these two hurricanes threatening Hawaii in quick succession it’s a useful reminder for the reinsurance and ILS market that the threat from named storms and hurricanes is not only in the Atlantic, and that U.S. exposures also exist in the Pacific.

A number of outstanding catastrophe bonds cover named storm risks for a Hawaiian hurricane as well as U.S. mainland risks, this years Citrus Re Ltd. (Series 2016-1) being a prime example, but any hurricane would need to be large, with very strong winds and make a direct hit in order to worry the cat bond market unduly.

However, no doubt some collateralised reinsurance contracts could be at risk if a lesser hurricane hit the islands and as ever these private ILS type deals are likely more exposed than any 144a cat bonds that cover Hawaiian hurricane risk.

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