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Hurricane Harvey still intensifying, catastrophic impacts possible in Texas


Hurricane Harvey continues to intensify over the warm waters of the Gulf of Mexico on its way to Texas by the weekend. Now Category 3, with sustained winds of 125 mph as at a 21:00 UTC 25th August update, hurricane Harvey poses a grave threat to the region, from storm surge, wind, rainfall and expected severe flooding, with tens of billions in property value at risk.

Update Sat 26th Aug 07:00 UTC:

Hurricane Harvey intensified further before landfall and came onshore around 03:00 UTC as a Category 4 storm with sustained winds of 130 mph and a minimum central pressure of 938mb.

Original article continues below:

Note: The tracking map and model run graphics below will all update throughout the day.

There are a number of specific factors that make hurricane Harvey a storm that Texas and surrounding area residents need to be particularly alert to, with meteorologists warning of potentially catastrophic impacts due to Harvey.

1) Harvey is travelling over very warm Gulf waters and some meteorologists have not ruled out Category 4 strength by landfall, although Cat 3 is most likely still; 2) the rainfall levels associated with Harvey will be life threatening over the coming days; 3) Harvey is going to be slow-moving, meandering over the affected region for some time (perhaps days) exacerbating the flood impacts.

For insurance, reinsurance, ILS fund and catastrophe bond interests, hurricane Harvey poses a threat of losses, although at this stage it is far too early to give credence to industry loss estimates, which a variety of underwriting sources say range from $5bn to ~$20bn currently (reflecting significant uncertainty, little credence is given to such early estimates but this is where the market is currently focusing we are told).

Harvey currently has sustained winds of 125 mph, higher gusts, a minimum central pressure of 941mb (as at the 21:00 UTC update from the NHC) and is forecast to strengthen further, perhaps all the way to a landfall on the middle Texas coastline late Friday night or Saturday morning local time.

Hurricane Harvey forecast path:

Hurricane Harvey forecast track and path

Hurricane Harvey forecast track and path (from the NHC)

Hurricane Harvey wind speed intensity forecast:

Hurricane Harvey wind speed intensity forecast - From

Hurricane Harvey wind speed intensity forecast - From

The value at risk due to hurricane Harvey is enormous, with 232,721 homes along the Texas coast potentially exposed to hurricane-driven storm surge from a Category 3 Harvey, according to Corelogin, which together have a reconstruction cost value (RCV) of approximately $39.6 billion.

Take Harvey to Category 4 and the number of properties potentially at risk rises to 354,853, with a reconstruction cost value of nearly $63.8 billion. Lift the intensity to Category 5 and over 482,000 homes are at risk of storm surge, with a value of almost $87 billion, according to Corelogic.

In the insurance market, A.M. Best market share data shows that State Farm is the most exposed in the region, with Allstate, Farmers Insurance, and USAA next in line.

These insurers all have relatively high attachment points for their reinsurance programs and catastrophe bonds, ILS or collateralized coverages in-force, but a Category 3 or 4 Harvey could certainly see them come into play, perhaps even a Cat 2 hurricane if the impacts are in areas where insurers exposures are particularly concentrated.

Smaller insurers, particularly the property specialists in coastal Texas regions, are likely the most exposed to financial impacts of Harvey, and also have lower attachment points for their reinsurance programs, with many making use of collateralized products.

There are, of course, numerous catastrophe bonds with exposure to Texas hurricane risks, as well as collateralized reinsurance or retrocession layers and private ILS contracts. Also, the majority of reinsurance sidecars will carry some exposure to hurricane Harvey as well.

The Gulf of Mexico offshore energy industry has swung into action, with Anadarko, Shell and Exxon all putting offshore platforms on an evacuation footing, while other oil drillers onshore in Texas are stopping activities while Harvey approaches and passes. Refiners have also shut plants in the Texas coastal regions, we understand.

For reinsurance, ILS and catastrophe bond interests there is significant exposure in Texas and while the rainfall threat may not be as fully-insured, the coastal surge and wind threats likely are more so.

Category 2 Hurricane Ike in 2008 cost the insurance and reinsurance industry somewhere around $12.5 billion to $15 billion, while economic losses were closer to $40 billion, so it’s easy to see how a Cat 3 or 4 hurricane Harvey could cause a significant impact to re/insurance markets, with some impact to ILS and cat bonds possible at Ike-like levels of impact.

The NHC continues to forecast a catastrophic flooding situation, with extreme downpours that could result in rainfall totals now forecast as high as 35 inches in some areas over the coming days. That combined with storm surge flooding could make Harvey more of a water than wind event even at a Cat 3 landfall and certainly for Texas residents the water poses the gravest dangers.

Hurricane Harvey is forecast to come ashore late Friday to early Saturday, likely at Category 3 strength with winds of 111 mph or higher. There is some uncertainty about Harvey’s direction after landfall and many model runs are now showing the storm meandering inland and then reverting south to re-emerge over the Gulf where it could re-intensify and then strike further east with a second landfall. Should that come to pass it could be much more impactful, as the effects of Harvey will be felt for a significant period in some areas.

Hurricane Harvey forecast model runs:

Hurricane Harvey forecast track - From

Hurricane Harvey forecast track - From

The latest warnings of hazards to land from the NHC can be found below, as of 21:00 UTC:

RAINFALL: Harvey is expected to produce total rain accumulations of 15 to 30 inches and isolated maximum amounts of 40 inches over the middle and upper Texas coast through next Wednesday. During the same time period Harvey is expected to produce total rain accumulations of 5 to 15 inches in far south Texas and the Texas Hill Country over
through southwest and central Louisiana. Rainfall of this magnitude will cause catastrophic and life-threatening flooding.

STORM SURGE: The combination of a dangerous storm surge and the tide will cause normally dry areas near the coast to be flooded by rising waters moving inland from the shoreline. The water is expected to reach the following heights above ground if the peak surge occurs at the time of high tide…

N Entrance Padre Island Natl Seashore to Sargent…6 to 12 ft
Sargent to Jamaica Beach…5 to 8 ft
Port Mansfield to N Entrance Padre Island Natl Seashore…3 to 5 ft
Jamaica Beach to High Island…2 to 4 ft
Mouth of the Rio Grande to Port Mansfield…1 to 3 ft
High Island to Morgan City…1 to 3 ft

The deepest water will occur along the immediate coast near and to the northeast of the landfall location, where the surge will be accompanied by large and destructive waves. Surge-related flooding depends on the relative timing of the surge and the tidal cycle, and can vary greatly over short distances. For information specific to your area, please see products issued by your local National Weather Service forecast office.

WIND: Tropical storm conditions are occurring in portions of the hurricane and tropical storm warning areas, and hurricane conditions are expected to begin within the hurricane warning area in the next few hours. Tropical storm conditions are likely to persist along portions of the coast through at least Sunday.

SURF: Swells generated by Harvey are affecting the Texas, Louisiana, and northeast Mexico coasts. These swells are likely to cause life-threatening surf and rip current conditions. Please consult products from your local weather office.

TORNADOES: A few tornadoes are possible through Saturday near the middle and upper Texas coast into far southwestern Louisiana.

Also read: As Harvey nears Texas, analysts highlight re/insurers risk of losses and Harvey to near hurricane status as Texas set for torrential rains.

Track Harvey as the storm makes its way towards the Texas coastline over at our dedicated 2017 Atlantic hurricane season page.

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