Twelve Securis has reported that it does not expect any significant loss impact to the cat bond market from yesterday’s Kumamoto, Japan earthquake, while an assessment of its private ILS positions also does not suggest any material impact.
Twelve Securis, the Zurich headquartered specialist catastrophe bond and insurance-linked securities investment manager, is the latest to provide an event report related to the magnitude 6.8 earthquake that struck the Kumamoto prefecture of Kyushu, Japan yesterday.
Earlier today we reported that a number of ILS investment managers had made comments on the earthquake and its potential impact on the market, with Euler ILS Partners estimating it could be a US $3 billion to $4.5 billion insured loss event.
Twelve Securis stated in its report, “Based on the first estimates, the impact of the event is anticipated to be lower than, or similar to, the 2016 event after accounting for changes in property and values across Kyushu.”
The ILS manager explained that a PERILS AG industry loss estimate for the 2016 earthquakes in Kumamoto was US $6.1 billion.
Twelve Securis further stated, “Japan is highly seismically active, with correspondingly resilient and well-designed property and infrastructure. Since the 2011 Tohoku earthquake, five significant earthquakes with greater than USD 1 billion of insurance losses have impacted Japan. While the current event is not expected to have impacts anywhere near the level of Tohoku event, this event will likely rival many of the recent events, including the 2024 Noto event. Insurance impacts in the billions of dollars are anticipated.”
The investment manager commented on the potential impact to catastrophe bonds or private ILS positions it holds in its portfolios and funds.
“Based on the currently available information we do not expect any significant loss impact on the cat bond market or any of our cat bond funds.
“With respect to our portfolios containing private ILS exposure, our preliminary internal assessment does not currently indicate any material impact.
“We will provide an update should these initial assessments change,” Twelve Securis explained.
In addition, Twelve Securis also commented on the ongoing wildfire situation in Europe, in particular affecting France and Spain.
On the wildfires, Twelve Securis said, “The direct destruction of property has, however, remained relatively limited, with current reports of several hundred homes destroyed in Gironde, France. As such, the direct property insurance impact of these events, which is most relevant to property (re)insurance, is expected to be limited and ILS impacts are expected to be minimal.”
As we said before, it remains very early in the loss assessment for the Japanese earthquake, while the wildfire situation continues. It will be some time before formal estimates emerge from risk modelling firms and brokers, we imagine.
Reinsurance broker Howden Re has also commented on this earthquake, with its Japan leader Kentaro Tada, CEO of Howden Re Japan, saying that, “It’s too early for formal estimates, but we’d expect insured losses to remain well below the 2016 Kumamoto earthquake and closer to the 2024 Noto earthquake, unless the aftershock sequence reveals more extensive damage.”
Also read: Japan quake: ILS managers see minimal loss potential. Euler estimates $3bn-4.5bn insured.
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