hurricane Irma 2017

International ratings agency, A.M. Best, has highlighted the increased use of retrocessional reinsurance protection amongst global reinsurers, including from the capital markets, which could limit some exposure to hurricane Irma as it maintains its track towards Florida, U.S.

Hurricane Irma’s threat to Florida saw the catastrophe bond market drop 16% yesterday, their biggest single days decline on record, as the ILS market and its investors recognised the severe threat the major hurricane poses to their investments.

Updated – 11:00 AM UTC on September 10th: Major Hurricane Irma continues on its path towards the state of Florida, slightly weakened after striking Cuba but still with winds sustained at 130 mph with higher gusts, and a chance of some further intensification before it strikes the Florida Keys in the coming hours.

According to a Bloomberg article one of the mutual ILS funds managed by New York based Stone Ridge Asset Management has fallen 8% on the approach of hurricane Irma, as the manager marked it down in expectation of losses.

Broker sources told Artemis that they are seeing increasing interest in so-called back-up reinsurance covers, or products that can provide added protection until the end of the year, all a reflection of the hurricane Irma threat following Harvey so closely, but still live cat trading activity remains light.

There are many catastrophe bonds that are potentially at risk from a major landfalling Hurricane Irma, with as much as $14 billion of the outstanding cat bond market holding some level of exposure to Florida or U.S. east coast named storms and hurricanes.

The CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility) will payout approximately $15.6 million to the Governments of Antigua & Barbuda, Anguilla and St. Kitts & Nevis due to Hurricane Irma which triggered these countries’ parametric Tropical Cyclone insurance policies.

In the latest updates to the Hurricane Irma forecast path the Miami-Dade area of Florida coastline is firmly in the center of the forecast cone, with Irma predicted to hit somewhere around Biscayne Bay to Miami Beach, the results of which are estimated as a $131 billion realistic disaster scenario (RDS) by Lloyd’s.

Reinsurance and insurance-linked securities (ILS) investment manager Blue Capital Management said today that it is suspending its share repurchase programme for the listed Blue Capital Alternative Income Fund (formerly known as the Blue Capital Global Reinsurance Fund), as it waits to see if there will be any impact from Hurricane Irma to its portfolio.

Catastrophe bond trading in the secondary market has remained slight on the approach of major Hurricane Irma, with the market seemingly holding its breath to see which way and when the storm turns northwards and if Florida can avoid a landfall.