hurricane Irma 2017

Risk modelling firm AIR Worldwide has reduced its estimate of insurance and reinsurance industry losses caused by hurricane Irma, narrowing the range and dropping the upper end to now forecast somewhere between $32 billion and $50 billion of losses across the U.S. and Caribbean.

Investors in insurance-linked securities (ILS) and collateralised reinsurance investment funds are reloading in order to provide ILS fund managers with the necessary capacity to take advantage of attractively priced opportunities that have been presented in the wake of hurricanes Harvey and Irma.

Estimates of losses to the National Flood Insurance Program (NFIP) from hurricanes Harvey and Irma’s flooding are on the rise, leaving the NFIP’s administrators with the difficult task of refunding the Program which is technically bankrupt and all but guaranteeing that the $1.024 billion reinsurance layer will payout.

In a recent report, global ratings agency A.M. Best has warned of the potential impact to Florida exposed catastrophe bonds from the devastation caused by hurricane Irma, but the real exposure for the market is quite low and aggregated losses could be more of a threat.

Reinsurance and insurance-linked securities (ILS) investment manager Blue Capital Management warned its shareholders in the Blue Capital Alternative Income Fund (formerly known as the Blue Capital Global Reinsurance Fund) of the complexity of the loss from hurricane Irma.

One of XL Catlin’s outstanding catastrophe bonds, the $300 million Galileo Re Ltd. (Series 2015-1), has been heavily discounted in trading by investors, as they look on the transaction as one of those deemed most at risk of loss due to the combined impacts of hurricane Harvey and Irma.

Global reinsurance firm Munich Re said yesterday that it anticipates falling to a loss in the third-quarter due to its losses from hurricanes Harvey and Irma, which suggests a loss to the company somewhere in the region of EUR 500 million to EUR 1 billion.

The insurance and reinsurance industry loss from hurricane Irma has been estimated at $25 billion by catastrophe risk modelling firm Karen Clark & Company (KCC), with $18 billion of this from the United States and the remainder from the Caribbean.

Anticipating rate movement post-Irma, Dirk Lohmann, chief executive of Zurich-based ILS fund manager Secquaero reveals the company is working with Schroders (its main backer) to come up “with additional offerings that are more focused on just the U.S. risk.”

Economic losses from hurricane Irma are likely to rise to somewhere within a range from $58 billion to $83 billion, according to Moody’s Analytics, with lost economic output contributing as much as $16 billion given the wide area impacted by the storm.