For our latest updates read our article from the 17th March.
We’re going to continue updating you on the situation in Japan after last Friday’s devastating earthquake and tsunami on this page today. We expect updates to be less frequent today. You can find some of the important updates from late yesterday at the bottom of this article. We’ll keep this page updated with items we feel of interest to our readers. Links to our other articles related to this disaster can be found below.
Other posts on this disaster:
- NZ Super Fund not expecting losses on catastrophe bond investments
- Catastrophe bond indices dip after Friday’s earthquake in Japan
- UPDATED: The catastrophe bonds which are exposed to Japan quake, including details on the structure and triggers used (where we have it)
- Updates from 15th March
- Updates from 14th March
- Updates from 13th March
- Updates from 12th March
- S&P leaves Japan quake exposed cat bond ratings unchanged
- Reinsurance stock prices hit by Japan quake
- Updates from 11th March
Latest updates (most recently added at the top):
– The Uk’s Guardian newspaper has an article discussing the possibility that Japanese investors will seek to repatriate their funds by offloading investments made abroad.
– The BBC has a great write up on the situation at the Fukushima nuclear plant with particular reference to reactor 4.
– Latest official figures show the death toll at 4,314 people with 8,606 people missing and 2,282 injured.
– This amazing interactive Japan quake map really shows the amount of quakes and the intensity of them over the last few days.
– As a result of the EU energy chief’s comments (below) the Wall Street Journal is reporting that shares have dropped further on U.S. exchanges.
– The BBC reports:
EU’s energy chief Guenther Oettinger has said that in the coming hours “there could be further catastrophic events, which could pose a threat to the lives of people on the island”. He told the European Parliament the Fukushima nuclear site was “effectively out of control”. “The cooling systems did not work, and as a result we are somewhere between a disaster and a major disaster.”
– The update from EQECAT (below) also references a summary report of ground motions produced by the National Research Institute for Earth Science and Disaster Prevention. This summary report uses data from K-Net earthquake monitoring network, the network used as a data source for some of the catastrophe bonds exposed to Japanese earthquake. You can download the summary report in PDF format here (in Japanese).
– EQECAT has issued its first insured loss estimate for this event. The report says:
EQECAT estimates the total insured loss from this event to be $12-25 Billion USD. The largest component of insured loss will be covered by the property insurance market, which provides earthquake insurance to individuals and businesses in Japan. The following is a breakdown of the amount of estimated market losses by line of business. These estimates do not account for losses associated with the current nuclear emergency at power plants in the region.
Coverage $Billions in USD EQ Shake 8-15
(Estimated 25% ceded to JERP)
Auto 0-1 Marine 1-3 Life 2-3 Personal Accident 1-2
You can access this update from EQECAT here.
– The mayor of Japanese town Ishinomaki has said that he expects the number of missing as a result of the earthquake and tsunami in his town alone to reach 10,000.
– EQECAT are holding an online briefing about this earthquake event tomorrow, 17th March at 11am EST (3pm GMT):
Online Briefing: Understanding the M9 Tohoku Pacific Offshore Earthquake http://bit.ly/gUmuqY
– ACE Limited has announced a preliminary loss estimate for the earthquake event in Japan. They put their insurance and reinsurance losses at somewhere in the range of $200m to $250m.
– We’ve just found this excellent resource which shows graphs displaying earthquake and radiation information in Japan. well worth bookmarking.
– In a report published yesterday, Standard & Poor’s said that insurers strong capital positions should help them avoid or at least forestall any ratings downgrades caused by the Japan earthquake.
– Some foreign companies have begun evacuating workers out of Japan according to the BBC.
– Life insurers took a hit yesterday as concerns grew about the claims they could suffer due to the disasters. Aflac ended the day down 5.6% (although had been 11% down earlier in the day). Prudential Financial dropped 1.9%, and had been down 8%, while MetLife Inc. fell 3%. As well as the fear of losses impacting these companies a lot of the negative reaction is due to an expected dip in opportunity in Japan which has been seen as a growing market for life insurers. Aflac counts Japan as 70% of its earnings, Prudential 40%.
– The Australian Financial Standard reports:
Paul Gregory, head of communications for New Zealand Superannuation Fund, said its catastrophe bond exposures are not considered likely to be triggered by the earthquake, and the company would remain invested in catastrophe bonds.
“As you’d expect all of our investments are under regular review as a matter of course. However we continue to be comfortable investing in this space and will not be backing out,” he said.
– The official number of dead or missing from the disasters now sits at over 11,000. Confirmed deaths stands at 3,771.
– Workers have returned to the Fukushima plant as radiation levels have fallen again, it is reported.
– Share prices in TEPCO, the operator of the Fukushima nuclear plant, have dropped nearly 25% in Tokyo trading.
– France has urged its nationals to leave Tokyo, to head south or leave Japan all together over fears of harmful radiation reaching the Japanese capital. Air France is providing two planes to help evacuate nationals.
– Aftershocks have again shaken Tokyo with reports of swaying skyscrapers. The USGS reports three earthquakes of M5.0 or greater so far today in the northern Honshu region.
– Reports from the Fukushima nuclear plant continue to be confusing and concerning. A fire broke out there last night in the Reactor 4 housing. Reports of white smoke were made early this morning. Then the workers at the plant who have been attempting to cool the nuclear fuel rods were pulled out of the facility due to a spike in radiation levels.
– Many countries in Asia have announced that they will begin checking any imports from Japan for radiation. Airline passengers have also been checked in some countries on arrival from Japan.
– Japan’s central bank injected a further $43 billion into the money markets to help ease the impact from the quake.
– Japanese stock prices bounced back today, finishing the day 5.68% up as initial fears of the economic impact of the earthquake and tsunami subsided. Some observers say the rise will have been some bargain hunters seeking to buy shares at low prices and also the knock on effects of traders short selling over the last few days. It will take some weeks or possibly months for the Japanese stock market to fully factor in the economic loss and loss in production that the disaster will cause.
Important updates from late yesterday:
– Standard & Poor’s has revised its outlook on the Japanese non-life insurance sector to negative from stable due to Friday’s earthquake and tsunami disasters. They believe the events are likely to have a negative effect on non-life insurers earnings and capitalization. S&P said:
The 16 Japanese non-life insurers (including one reinsurer) that Standard & Poor’s rates all currently carry stable rating outlooks. Our negative sector outlook reflects the possibility that we could downgrade individual insurers as we obtain information on the amounts of their insured losses, and we assess the impact of the stock market volatility, if it continues.
We believe most of Japanese non-life insurers’ earthquake-related net losses will likely be moderate overall. Losses are likely to stem largely from:
- Earthquake insurance for residential properties;
- Earthquake fire expense insurance; and
- Extended insurance coverage for commercial and industrial risks.
– Prices on the secondary market for catastrophe bonds exposed to this disaster has fallen since the event with bonds being offered for below par by investors seeking to offload any risk to these events. More from Reuters.
– TEPCO, the company who operate the Fukushima nuclear plant, have confirmed that a fire has broken out at reactor 4 in the early morning. Japan’s nuclear safety committee said earlier that radiation levels of 400 millisieverts an hour had been recorded near reactor 4. Exposure to over 100 millisieverts a year is a level which can lead to cancer, says the World Nuclear Association. Update: The BBC says that reactor 4 was not in use at the time of the earthquake and was being used to store spent fuel rods.
A.M. Best also has ratings on the following catastrophe bonds exposed to Japan earthquakes:
- Topiary Capital Limited—“bb+” on $200 million Series 2008-1 Class A Principal-at-Risk Variable Rate Notes due August 5, 2011 sponsored by Platinum Underwriters Bermuda Ltd.; and
- Valais Re Ltd. —“bb” on $64 million and “b” on $40 million Series 2008-1 Class A and Class C Principal-at-Risk Variable Rate Notes both due June 6, 2011 sponsored by Flagstone Reinsurance Holdings Limited.
Topiary Capital Limited is a non-indemnity second-event catastrophe bond. It has not yet been subject to an event notice; therefore, the Japan earthquake event will not cause note holders to lose any principal. The Valais Re Ltd. catastrophe bonds are indemnity-based, and the Japan earthquake peril cover includes fire following, tsunamis and other causes of loss.
A.M. Best is monitoring the potential for losses to note holders. The ratings on the catastrophe bonds will remain unchanged unless A.M. Best receives updates from the calculation agent or the ceding reinsurer for each catastrophe bond indicating that the Japan earthquake is a triggering event.
– Business Insurance reports that investment bank Keefe, Bruyette & Woods Inc. suggested in an analyst report that this disaster could cost European reinsurers “between 4% and 8% of nonlife net earned premiums”.
– EQECAT reports that an earthquake earlier today which struck south of Mt Fuji in Japan with a magnitude of M6.2 may have caused further losses of as much as $500m insured losses or between $1 billion to $2 billion in economic losses. The earthquake is on a different fault system to Friday’s disaster. Some reports suggest that 4 people died because of this earthquake.
– Credit Suisse said in an initial estimate that Japan faces an economic cost of at least $180 billion or 3% of its annual economic output due to the disaster.
Location of the Japanese earthquake event: