Dear Investors
Hurricane «Helene» is currently located west of Cuba and is forecast to grow in size and rapidly intensify into hurricane strength before making landfall in Florida on Thursday evening local time. It is the first major hurricane US landfall of the 2024 hurricane season. The National Hurricane Center (NHC) currently forecasts that the center of the hurricane will approach Florida’s Big Bend or Panhandle area as a Category 3 hurricane. Florida’s Big Bend area is only lightly populated, and the track forecast momentarily places the densely populated Tampa Bay area outside of the cone of uncertainty. «Helene» will bring dangerous storm surge, heavy rainfall, and strong winds to portions of the coast of Florida.
To assess the consequences for CAT bond investors, it is worth comparing «Helene» to hurricane «Idalia», which hit Florida’s Big Bend last year and caused damage across the southeastern parts of the United States. However, losses from «Idalia» were not significant enough to cause substantial losses for CAT bond investors – we estimate that if «Idalia» would occur today, nominal losses to the market would be below 0.5%. «Helene» is forecast to be a weaker but larger storm than «Idalia». Initial modelling indicates that industry losses will most likely stay in the single digit billion dollar range, which could erode some aggregate structures but is unlikely to cause any CAT bonds to pay out. We therefore expect only moderate market reactions from the storm, with minimal, if any, losses to a very limited number of catastrophe bonds held within our funds.
As usual, also smaller events may lead to a further erosion of annual aggregate structures which have been eroded from previous events. We significantly underweight such aggregate CAT Bonds.
There is still high uncertainty in the track and intensity forecast and we will follow up with updated information if warranted.
Kind regards
Your Plenum-Team
Der Beitrag Hurricane “Helene” (Gulf of Mexico) – Category 1 erschien zuerst auf Plenum Investments.