Dear Investors
After hurricane “Beryl” had already caused severe devastation in the south-east of the Caribbean, the storm is now moving on towards Jamaica. “Beryl” is expected to reach Jamaica this evening as a strong category 4 hurricane; in the meantime, “Beryl” was even categorised as a category 5 storm. The island state is therefore threatened by life-threatening winds, storm surge, rain and flooding.
Jamaica has taken precautions for such an event and, among other things, purchased parametric risk cover through a CAT bond. For this parametric cover, Jamaica and parts of the surrounding sea were divided into 19 sub-areas and a minimum air pressure was assigned to each sub-area. The CAT bond makes payments if the central air pressure of the storm falls below the defined minimum air pressure in one or more sub-areas. The minimum payout is 30% of the nominal value and increases with increasing storm intensity and the number of affected sub-areas and can reach up to 100%.
Hurricane “Beryl” will weaken in the hours until it hits Jamaica and the exact path of the storm is also still subject to uncertainty. However, it seems very likely that under the current conditions there will be at least a partial payout of the CAT bond. We hold the following allocations to this bond:
– Plenum CAT Bond Dynamic Fund: 0.58%
– Plenum CAT Bond Defensive Fund: 0.00%
– Plenum Insurance Capital Fund: 0.00%
According to the current forecast, after passing by Jamaica, the storm will continue on towards the Yucatan peninsula of Mexico, where it is expected to make landfall South of Cancun as a category 1 or 2 hurricane. The Mexican government has also a parametric CAT Bond cover against hurricanes such as Beryl, however this CAT Bond is not expected to be impacted by the storm as only major hurricanes (category3 and above) will impact the bond.
We will inform you as soon as we have new information about the impact of “Beryl” on the CAT bond market and our portfolios.
Kind regards
Your Plenum-Team
Der Beitrag Hurricane “Beryl” (Caribbean) – Category 4 erschien zuerst auf Plenum Investments.