The eastern Van region of Turkey has been hit by another damaging earthquake less than a month after a M7.2 quake struck the area. The second quake struck late yesterday in the Edremit district, 16km (10 miles) south of Van, the US Geological Survey said. An M5.6 quake, so much weaker than the one in October, it has still caused significant damage and at least seven people are dead.
Twenty-five buildings have collapsed including a six-storey hotel, another hotel and an apartment building in the city of Van. Up to a 100 people remain unaccounted for.
The Van region has a lower level of insurance penetration that the more touristed and populous areas of Turkey. As a result of that it is assumed that this second quake will not be a threat to the Ianus Capital catastrophe bond which provides cover for Turkish earthquakes in a transformer deal between deal sponsor Munich Re and the Turkish Catastrophe Insurance Pool (TCIP).
In fact, according to the terms of the Ianus Capital cat bond, only one quake within a 30 day period can count as an event anyway. If two quakes occur within 30 days then the calculation agent will (if requested) calculate an index value for both and the quake with the higher index value will become a qualifying event. For an event to cause a loss of principal to investors it has to breach a set index value.
It’s assumed that due to the low insurance penetration in Turkey’s eastern regions there won’t be a sufficient modelled loss to the TCIP portfolio for this second quake to cause any loss.
We’ll keep you updated should those assumptions change.
Our previous coverage of Ianus Capital Ltd.