Major Hurricane Michael made landfall in the Florida panhandle, near the borders of Gulf and Bay counties, as a category 4 hurricane on Wednesday, 10 October. The storm almost reached category 5, which makes it the strongest storm to hit the US mainland since Hurricane Andrew in 1992.
Estimates for losses have been on the increase in part because Michael was much stronger at landfall than had generally been expected. Currently, insured losses are estimated by modelling system AIR to be USD 8.8bn (stating a range of USD 5 – 12bn) and RMS estimated the losses at USD 5.6bn (range USD 1.5 – 10.3bn). KCC, another industry modeller estimated losses would be USD 8bn, 50% of which would be in the Gulf and Bay counties alone. Note that these estimates are for wind and surge only, at the industry insured loss level. Inland flood is excluded but it is not expected to be significant. Elsewhere, JLT Re, the reinsurance broker, estimated that, ultimately, the insured loss will be over USD 10bn.
Based on the current estimates, Twelve Capital does not expect any significant impact on Cat Bond funds and portfolios. Looking at private ILS contracts, experience from prior events lead Twelve to believe that Hurricane Michael is unlikely to be a major event from an insurance claims perspective. This view is also based on recent communications from US agencies the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP). However, it is still very early to draw a conclusion.
The assessment of insured losses is still ongoing. Estimates remain wide-ranging, demonstrating the uncertainty around quantifying the insured losses relating to Hurricane Florence. RMS estimates industry-insured losses from wind, surge and inland flood (including NFIP) to be USD 2.8-5bn. The first PCS loss estimate remains at USD 2.5bn, NFIP itself estimates their losses at USD 1-2bn.
First loss information received from cedents, including the NFIP, indicate little to no impact for the Twelve Capital portfolios.
At the time of writing, the following natural events are ongoing or have recently occurred. At present, these events are not expected to have an impact on Twelve’s portfolios.
Tropical Storm Sergio
Sergio made landfall in Baja California, Mexico as a tropical storm, and then tracked inland.
Titli made landfall in northwest India on 11 October as a category 2 storm, flooding farmland, damaging property and killing several people.
Flash flooding impacted Mallorca, Spain on 9 October, killing a dozen people and damaging property.
European windstorm Callum hit the UK and Ireland on 12 October, resulting in minimal damage.