mexico

The Government of Mexico has received its first World Bank Catastrophe Deferred Drawdown Option (Cat DDO), which will help the country prepare better and respond more quickly to natural disasters, while also complementing both of its IBRD CAR Mexico 2024 and IBRD CAR Mexico 2024 (Pacific) catastrophe bonds and parametric insurance protection.

As major hurricane Simon’s path shifted west it appears to have remained offshore of the important parametric trigger zones related to the $175 million IBRD CAR Mexico 2024 (Pacific) catastrophe bond, according to analysis by Isacco Loconte an insurance-linked securities (ILS) Investment Specialist at asset manager Azimut Switzerland SA.

Hurricane Simon in the Pacific remains a very strong storm at major hurricane strength and is expected to sustain that status when it nears landfall on the Mexico coastline on Sunday, with its intensification and deeper pressure now putting the $175 million IBRD CAR Mexico 2024 (Pacific) parametric catastrophe bond at potential risk.

Hurricane Polo has now made landfall on the west coast of Baja California Sur, Mexico with sustained winds of 110 mph and a minimum central pressure of 965mb, at which level there is no threat to the parametric trigger of the Mexican governments $175 million IBRD CAR Mexico 2024 (Pacific) catastrophe bond.

Hurricane Polo is rapidly intensifying off the southwestern coast of Mexico and the strengthening trend is expected to continue, while the track remains uncertain at this time, which has brought the $175 million IBRD CAR Mexico 2024 (Pacific) parametric catastrophe bond into focus this week.

After a magnitude 7.3 earthquake struck just off the southern coast of Mexico on Friday, analysis suggests this event was a near-miss for attaching the parametric trigger of one tranche of notes from the country’s World Bank facilitated IBRD CAR Mexico 2024 catastrophe bond transaction.

Liberty Mutual Reinsurance (LM Re), the reinsurance arm of the insurance group, and Safehub, a provider of seismic sensor and risk management technology, have partnered to provide the Mexican federal government with a new nationwide parametric earthquake and volcanic risk insurance solution.

The government of Mexico has now finalised its main insurance protection for natural disasters and severe weather events for the coming year, doubling the size of its parametric catastrophe insurance arrangement to around US $575 million for 2026 into 2027.

According to Fitch Ratings, recent catastrophe bond and insurance risk letters (LRS) issuances within Latin America represent a strategic opportunity to expand and sophisticate the regions’ insurance debt market.

Estimated insured losses from Hurricane Erick, which struck Mexico’s Pacific coast last week, are expected to fall well bellow the US$1.97 billion insured losses from 2023’s Hurricane Otis, according to global ratings agency AM Best.