japan typhoon

Typhoon Nangka is heading for a landfall later this week in Japan (late Thursday), with a recent forecast suggesting that the storm could maintain Category 2 strength at that point, putting insurance and reinsurance contracts at risk, as well as the Aozora Re and Akibare II catastrophe bonds.

Despite losses from recent catastrophe events in Japan being manageable there is an expectation that Japanese non-life insurers will seek to retain less risk on their balance-sheets and make greater use of reinsurance and ILS instruments like catastrophe bonds.

Typhoon Phanfone, which has intensified rapidly to a Category 3 storm with sustained winds of up to 120mph and gusts as high as 150mph, is on course to impact Japan, possibly Tokyo itself with hurricane strength winds by late Sunday or Monday.

With the maturity of Tokio Marine’s $160m Kizuna Re Ltd. catastrophe bond, which it sponsored in 2011 to secure fully collateralized reinsurance cover for typhoon risks, Japanese typhoon has shrunk to make up just 1% of the outstanding cat bond market.

The eventual insured loss total for typhoon Halong which struck Japan at the weekend could be of a similar magnitude to 2011’s typhoon Roke which was estimated at $1.1 billion, according to risk modeller AIR Worldwide.

Typhoon Halong, no longer a super typhoon having weakened a little, is now a category 1 equivalent typhoon with sustained winds of around 85mph and gusts of 105mph but threatens Japan with a direct hit of winds, torrential rains, floods and a storm surge.

Super typhoon Halong, the latest storm in the western Pacific typhoon season, has intensified to super typhoon status with sustained winds currently over 150mph and threatens to make a landfall on southern Japan late next week.

Typhoon Rammasun is quickly approaching southern China and northern Vietnam with rapid intensification occurring meaning that the typhoon could reach category 4 status, one short of super typhoon, before it makes landfall.

The first major threat to Japan from the typhoon season is developing as a typhoon named Neoguri (or typhoon 08W or typhoon 1408) has intensified to super typhoon status, with maximum sustained winds of over 150 mph and further strengthening forecast.

Japanese insurance group Sompo Japan Nipponkoa’s (SJNK) latest catastrophe bond Aozora Re Ltd. (Series 2014-1) priced at the lowest end of reduced guidance last week, showing investors appetite for this remote risk, JPY denominated bond.