Canadian Underwriter

In the Alternative

November 29, 2017   by Greg Meckbach, Associate Editor

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Despite four North Atlantic hurricanes making landfall on United States territory since August and most catastrophe bonds issued in the 12 months prior to June 30 having U.S. property risk exposure, insurance-linked securities (ILS) experts are not reporting any signs that investors are shying away from the ILS market.

Spared a major hurricane for 12 years — 2012’s Sandy had been downgraded to post-tropical storm status when it hit New Jersey — Puerto Rico, Texas, Florida and Louisiana were the sites of hurricane landfalls from August 25 to October 7.

Hurricane Maria made landfall September 20 in Puerto Rico, 10 days after Hurricane Irma made two separate landfalls in Florida and less than a month after Hurricane Harvey made landfall near Rockport, Texas.

Funds from ILS “will have to cover significant losses,” associated with hurricanes Harvey, Irma and Maria (HIM), Emmanuel Modu, managing director and head of the ILS group at A.M. Best Company Inc., reported on October 16.

Citing figures from AIR Worldwide, Fitch Ratings Inc. reported in late September that “upper-end loss estimates” for Hurricane Maria alone were US$85 billion.

In addition, there is the US$50 billion in “upper-end expected losses from Hurricane Irma,” US$25 billion from Hurricane Harvey, more than US$20 billion in other catastrophic losses during the first six months of 2017 and the approximately US$3 billion from the September 19 earthquake in Mexico.

Read the full article in the Digital Edition of the November 2017 Canadian Underwriter.

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