2016 Atlantic hurricane season

According to rating agency Standard & Poor’s there are 15 catastrophe bonds it has given ratings to that are most exposed to hurricane Matthews impact on the Florida and U.S. eastern coastline. We also highlight a few which are not S&P rated and that we believe to be among the more exposed.

Hurricane Matthew could drag down returns for insurance and reinsurance firms, as well as ILS investors, but not offer the sector any solace from the soft market by increasing rates and pricing, according to analysts at Peel Hunt.

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.

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.

Hurricane Matthew has the potential to be a significant loss event for the insurance and reinsurance industry. It could also cause issues to some catastrophe bonds, eroding aggregate retention and increasing their attachment probabilities, according to Ben Brookes of RMS.

The so-called “live cat” market has come to life, albeit perhaps tentatively, as hurricane Matthew’s approach towards the U.S. has increased the certainty of what looks set to be a relatively major impact (at this time) with a number of ILW’s trading and as much as $100m of limit placed, Artemis understands.

At this time the catastrophe bond market has not shown a significant reaction to the slow approach of hurricane Matthew towards the U.S. coastline, despite the fact that the forecast path has been shifting steadily nearer to Florida with each NOAA update and now a hurricane watch has been announced.

Hurricane Matthew remains a major storm with 145mph winds as it barrels towards a potentially devastating strike on Haiti and Cuba. The Bahamas are next in its path and the risk of a U.S. landfall has risen, according to the forecast, with Florida and the Carolinas now in the forecast cone.

Hurricane Matthew has now intensified into a Category 4 storm, with sustained winds of 130mph (as at Monday morning) and higher gusts, as it continues its westward track through the Caribbean. A northward turn has targeted major hurricane Matthew towards Haiti, Jamaica, Cuba and the Bahamas.

According to risk modelling firm RMS the insurance and reinsurance industry is not expected to face any more than $400m in industry losses as a result of hurricane Hermine’s recent landfall in Florida and the subsequent wind and coastal flooding caused by the storm.