ILS firms will take a hit from Hurricane Beryl
As category 4 Hurricane Beryl steamed directly towards Jamaica today, insurance linked securities firms braced for a potential $150 million impact, according to Plenum Investments.
The Zurich-based ILS asset manager invests in collateralised reinsurance transactions, sourced and underwritten by Bermuda’s boutique reinsurer Sequant Re.
Insurance news website Artemis.bm reported that the World Bank facilitated International Bank for Reconstruction and Development catastrophe bond for Jamaica could be triggered by Hurricane Beryl.
The catastrophe bond gives the Caribbean island of 2.8 million people, a source of parametric disaster insurance, funded by capital market investors.
If it is activated, the responsive parametric payout would go to Jamaica’s government, to help fund the island’s recovery from Hurricane Beryl.
Steve Evans of Artemis.bm reported that offers of the Jamaica ‘cat’ notes in the secondary market fell as the forecast for Beryl grew worse, with many investors seeing a partial payout as a possibility.
“Plenium Investments clearly sits in this group and has also noted that it is a holder of the Jamaica cat bond, with a 0.58 per cent in its premium Cat Bond Dynamic Fund,” Mr Evans wrote.
This week Hurricane Beryl rapidly intensified to a category 5 storm. Yesterday, it dipped just below that category with 155mph winds to batter the southeastern Caribbean. It destroyed almost 90 per cent of homes on Union Island in the Grenadines, and killed at least six people in the region.
Robert Muir-Wood, chief research officer, Moody's Insurance Solutions, said Hurricane Beryl was the strongest hurricane to impact the southernmost Caribbean Windward Islands.
During its five days in existence, Hurricane Beryl has already broken numerous records.
Moody’s Insurance Solutions revealed that Beryl is the third-earliest ever major Atlantic hurricane, and the earliest-ever category 5. In the last 24 years, only 2005 and 2008 saw early-July major hurricanes.
Moody’s has predicted that Hurricane Beryl will break more records before its winds are spent. After hitting Jamaica it was expected to head on towards Cayman Islands and Mexico.
The North Atlantic is experiencing a marine heatwave, which makes it the perfect breeding ground for storms.
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