More anecdotal evidence suggests that Louisiana Citizens Pelican Re Ltd. (Series 2012-1) catastrophe bond will not be triggered by claims resulting from hurricane Isaac. Just the other day Richard Robertson, the chief executive of Louisiana Citizens, made comments which suggested he felt the cat bond would not be in danger. Now the Louisiana Insurance Commissioner, Jim Donelon, has suggested that the claims being faced by Louisiana Citizens will fall well short of the $200m trigger.
In an interview with Louisiana based newspaper, The Advocate, Donelon said that Isaac will likely cause just over $1 billion on losses from wind damage to properties. He expects the National Flood Insurance Programme to pay out about the same for properties covered under the government run flood scheme.
Donelon said that the claims for the state-backed property insurer of last resort, Louisiana Citizens, will amount to less than $75m. That’s well below the trigger for the Pelican Re cat bond and in fact would mean that LA Citizens could manage the claims out of their cash on hand and not even have to claim on their reinsurance policy. The reinsurance policy would need to be totally exhausted before the cat bond even triggers, so if the claims are as low as Donelon suggests then Pelican Re is certainly safe.
So it’s looking more and more certain that the cat bond market will escape any loss from hurricane Isaac and that reinsurers will not have to pay too many losses themselves. Should the estimates change dramatically, meaning that Pelican Re looks at risk, we will update you.
Register today for ILS Asia 2023, our next insurance-linked securities (ILS) market conference. Held in Singapore, July 13th, 2023.
Get a ticket soon to ensure you can attend. Secure your place at the event here!