A strong earthquake of magnitude 7.5 occurred on the west coast of the Japanese main island of Honshu on the afternoon of New Year’s Day. Tsunami warnings were issued for large parts of the Japanese and for parts of the Russian Pacific coast. The authorities warned of waves up to 3m. Ishikawa Prefecture was particularly affected. The earthquake occurred far away from the major cities of Saitama, Yokohama and Tokyo. The earth tremors were felt there, but were of light to moderate intensity, which should limit the expected damage. There are no reports of damage or casualties at this early stage, but there were power outages and disruptions to air and rail transport.
However, the earthquake is unlikely to have any noticeable impact on the performance of CAT bonds. Earthquake risk in Japan is only a minor component of the CAT bond market and our funds. The affected region is far from the large economic and population centers in Japan. Hence the US earthquake service USGS expects an economic loss of less than 1% of the Japanese GDP in an initial assessment. Losses in the single-digit USD billion range will not be sufficient to trigger payments from CAT bonds, but could lead to an increase in the aggregate losses in aggregate structures.
We will of course inform you immediately should our initial assessment of the current situation change.
We will inform you immediately if our assessment changes.
Kind regards
Your Plenum-Team
Der Beitrag NewsFlash: M7.5 Earthquake in Japan erschien zuerst auf Plenum Investments.