hurricane Matthew 2016

Hurricane Matthew’s close encounter (so far) with the Florida coastline, and as Georgia and South Carolina are also set to feel the hurricane’s force, could be the first real test for insurance, reinsurance and insurance-linked securities (ILS) players in recent years, according to rating agencies and equity analysts.

Haiti will receive a payout of a little over $20 million from the CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility), after hurricane Matthew triggered the parametric insurance policy the country has in force.

The risk of a major insurance and reinsurance industry loss seems to have decreased with the last few forecast updates for hurricane Matthew, as the path looks more likely to remain offshore of the Florida and southeast U.S. coastline.

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.

Barbados is set to receive a $975,000 payout thanks to its parametric tropical cyclone insurance policy from the CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility), after hurricane Matthew triggered the facility.

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.