mexico

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.

Twelve Securis, the specialist insurance-linked securities investment manager, is not anticipating any impact to the World Bank catastrophe bond or any of the firm’s private ILS positions due to losses caused by major hurricane Erick in Mexico yesterday.

Major hurricane Erick has made landfall on the coast of Mexico with 125 mph sustained winds in the state of Oaxaca and the NHC reports the minimum central pressure at 950mb, which is above the level where the World Bank facilitated $175 million IBRD CAR Mexico 2024 (Pacific) parametric catastrophe bond would be triggered.

Were major hurricane Erick to trigger the $175 million IBRD CAR Mexico 2024 (Pacific) catastrophe bond that provides disaster insurance to the Mexican government, it could reignite the debate surrounding parametric triggers, given the recency to another trigger event with hurricane Otis back in 2023, Florian Steiger of Icosa Investments has suggested.

Rapid intensification of tropical storm Erick into a major hurricane has brought Mexico’s Pacific coast hurricane parametric catastrophe bond, the $175 million IBRD CAR Mexico 2024 (Pacific) issuance, sharply into focus, as Erick’s central pressure is estimated just a couple of millibars above where the trigger for attachment sits.

While the focus for many is on what is still potential tropical cyclone nine and soon to become storm Helene on the Atlantic side, off the Pacific coast of Mexico hurricane John rapidly intensified and made landfall as a Category 3 storm which has resulted in enquiries from catastrophe bond investors.

According to sources, after hurricane Beryl came very close to triggering Jamaica’s $150 million IBRD CAR Jamaica 2024 catastrophe bond, there has been a slight decline in where it is marked on some pricing sheets, but this is thought only to account for minor uncertainty related to the potential for its track and meteorological data […]