According to consultancy Lane Financial, the yields in the catastrophe bond market are up between 15% and 25% following hurricanes Harvey, Irma, Maria and the Mexico earthquakes, a number it cautions could “easily rise that much again” as the real impacts of the hurricane season become clearer. Additionally, the mark-to-market loss on secondary bonds reflects not just an expectation of losses, but also “the view that the next issue of similar bonds will be issued at higher yield".
Hurricane losses are anticipated to be relatively low after Hurricane Nate made landfall on the US Gulf Coast as a category 1 storm with sustained wind speeds of around 85 mph on Saturday evening. According to AIR Worldwide the storm’s compact size and relatively fast forward speed reduced the impact of storm surge. "Reported structural damage to buildings has been limited thus far, as expected given Nate’s wind speeds and the stringency of building codes on the Gulf Coast. There were also very few reports of flood damage from Nate’s surge."
Based on its own data and modelling tools, reinsurance company SCOR currently estimates that the total private insured market loss for the combined Harvey-Irma-Maria hurricanes and Mexico earthquakes should reach $95 billion. SCOR estimates its own cost of these events at €430m, net of retrocession and tax for the third quarter of 2017.
Lancashire Holdings anticipates aggregate estimated net ultimate losses arising from hurricanes Harvey, Irma and Maria and the two recent earthquake loss events in Mexico to be in a range of $106m to $212m. This is after anticipated recoveries from its outwards reinsurance programme and the impact of outwards and inwards reinstatement premiums and includes losses within the Kinesis third-party capital facility.
Beginning with Hurricane Harvey, Property Claim Services (PCS), will publish aggregate flood loss information supplied by the National Flood Insurance Program (NFIP). Historically, NFIP losses have been excluded from PCS’s industry insured loss estimates. For Hurricane Harvey, the NFIP has received more than 87,000 claims and incurred more than $819m in losses as of September 26.
Property Claim Services
The third quarter of 2017 is expected to tally as one of the costliest quarters ever registered for natural disasters, according to Aon Benfield's Impact Forecasting. Steve Bowen, Impact Forecasting director and meteorologist, said: “The month of September was exceptionally busy and marked by the most active month on record in the Atlantic Ocean for hurricanes based on combined strength and longevity. The most prolific damage resulted from Hurricane Irma’s impact across the United States and the Caribbean, and Hurricane Maria’s track through the Caribbean.
Posted: Monday, October 9th, 2017