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.
Update – 10.30am BST, 05:30am ET: Hurricane Matthew has already begun to intensify again, reaching 125mph winds at the next NHC update. Further intensification is expected and the forecast path continues to show what could be a heavy loss event for the insurance, reinsurance and ILS market.
Update 2: 17:00 BST, 12:00 ET: Hurricane Matthew is now a Category 4 storm again, with 140 mph winds and bearing down on Florida.
Hurricane Matthew weakened slightly following its passage across Cuba, but the Bahamas is still taking a battering and the hurricane has tracked through some of the most populated areas with the most expensive real estate, with Nassau in hurricane Matthews path.
Meteorologists are forecasting a period of intensification after hurricane Matthew passes the Bahamas, with the storm showing all the signs of one ready to strengthen.
The forecast path keeps shifting the point where Florida’s coastline will begin to feel hurricane conditions further south and the expectation is that a significant portion of Florida’s coastline will now experience hurricane strength winds.
Update 11:20 BST / 06:20 ET, Oct 6th 2016: 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.
Some meteorologists suggest intensification into a Category 4 hurricane, but the storm shows the signature or one with a slim chance of reaching a Category 5 storm when hurricane Matthew nears the Florida coastline.
The below from WeatherBell’s Ryan Maue recently on Twitter:
Potential for a Category 5 hurricane is worrisome … Nothing to stop #Matthew on way to Florida except inner-core eye replacement.
— Ryan Maue (@RyanMaue) 6 October 2016
Hurricane Matthews central pressure has continued to drop, signaling intensification has begun and while the latest NHC update was for 954mb, that has already dropped to 952mb in just an hour according to the latest recon flights. The next update from the NHC may show Matthew has strengthened again.
For Florida’s coastal residents it is time to evacuate, as the chances of a significant proportion of the Florida Atlantic coast suffering hurricane force winds is increasing all the time.
For insurance, reinsurance and ILS interests uncertainty remains, as the eventual insurance industry loss will depend on just how close to land the eye of hurricane Matthew is. Any shift in the track further out to sea would make a huge dent to the eventual insurance and reinsurance industry loss. However, even if Matthew’s eye remains just offshore the fact that such a wide swathe of Florida is forecast to experience hurricane force winds suggests the loss could be meaningful.
Another recent tweet from Ryan Maue:
— Ryan Maue (@RyanMaue) 6 October 2016
As hurricane Matthew emerges from the Bahamas we should get a better view of its intensity and potential to maintain that as it approaches Florida. The track has not shifted much for some hours now, although there are some models shoring a landfall further south now which is particularly of note for insurance, reinsurance, catastrophe bond and ILS interests.
As below from one model run tweeted by Ryan Maue (other meteorologists are available):
Gets worse: ECMWF 00z deepens Matthew to 930 mb in next 18-hours prior to landfall *south* of previous solutions b/t West Palm & Ft Pierce pic.twitter.com/ltyxBRvFQ3
— Ryan Maue (@RyanMaue) 6 October 2016
Whatever happens over the coming 36 hours or so it seems Florida is in for its first major hurricane impact for many years and the insurance, reinsurance and ILS fund market will be tested to some degree.
Just how much is hard to say, but we expect the live cat activity will continue and buyers of reinsurance or retro protection (in ILW or swap form) may be more prevalent in the market today as the forecast for Florida continues to worsen.
Catastrophe bond trading is still expected to be relatively light, as still hurricane Matthew may not cause the level of losses required to really trouble in-force cat bonds, meaning sellers and buyers may not come together as often as you might think.
But as we wrote yesterday, there is a threat to aggregate structures (cat bonds or reinsurance) as hurricane Matthew could certainly erode some of the aggregate retention or deductibles, making deals more risky.
Finally, the chance of a recurve still exists, as a strengthening tropical storm Nicole could force Matthew down to the south where the chances of a curve back towards the west increase. Still, only some models are showing this scenario but it remains something to be aware of.
The latest from the NHC can be found below and we will keep you updated.
Also read our previous articles on hurricane Matthew:
summary of 200 AM EDT, 0600 UTC, information
location, 23.7N 76.7W
about 100 mi (160 km) SSE of nassau
about 295 mi (480 km) SE of west palm beach florida
maximum sustained winds, 115 mph (185 km/h)
present movement, NW or 320 degrees at 10 mph (17 km/h)
minimum central pressure, 954 mb (28.17 inches)
wind: hurricane conditions will continue over the central bahamas and spread into the northwestern bahamas today. winds will gradually diminish over the southeastern bahamas this morning.
hurricane conditions are expected to first reach the hurricane warning area in florida by late today and will spread northward thursday night and friday. tropical storm conditions are first
expected in florida by late this morning.
hurricane conditions are possible in the hurricane watch area in georgia and south carolina by late friday, with tropical storm conditions possible on friday.
tropical storm conditions are possible in the tropical storm watch area on the florida gulf coast beginning later today.
storm surge: the combination of a dangerous storm surge and large and destructive waves could raise water levels by as much as the following amounts above normal tide levels…
northern coast of cuba east of camaguey, 1 to 3 feet the bahamas, 10 to 15 feet
the water could reach the following heights above ground if the peak surge occurs at the time of high tide…
sebastian inlet to savannah river, 5 to 8 ft
deerfield beach to sebastian inlet, 3 to 5 ft
virginia key to deerfield beach, 1 to 2 ft
surge-related flooding depends on the relative timing of the surge and the tidal cycle, and can vary greatly over short distances large waves generated by matthew will cause water rises to occur well in advance of and well away from the track of the center.
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. there is a danger of life-
threatening inundation during the next 36 hours along the florida east coast from deerfield beach to fernandina beach.
there is the possibility of life-threatening inundation during the next 48 hours from north of fernandina beach to edisto beach. for a depiction of areas at risk, please see the prototype national weather service storm surge watch/warning graphic. for information specific to your area, please see products issued by your local National Weather Service forecast office.
the prototype storm surge watch/warning graphic is a depiction of areas that would qualify for inclusion under a storm surge watch or warning currently under development by the National Weather Service and planned for operational use in 2017. the prototype graphic is available at hurricanes.gov.
rainfall: matthew is expected to produce total rainfall amounts in the following areas:
eastern cuba, 8 to 12 inches, isolated 20 inches
central cuba, 3 to 5 inches, isolated 8 inches
the bahamas, 8 to 12 inches, isolated 15 inches
turks and caicos islands, 2 to 5 inches, isolated 8 inches
coastal eastern florida, 4 to 7 inches, isolated 10 inches
florida keys, 1 to 3 inches, isolated 5 inches
life-threatening flash floods and mudslides are likely in central and eastern cuba.
surf: swells generated by matthew will continue to affect portions of the north coast of cuba and the bahamas during the next few days, and will spread northward along the east coast of florida and the southeast u.s. coast tonight and thursday and continue into the weekend. these swells are likely to cause life-threatening surf and rip current conditions. please consult products from your local weather office.