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The global insurance and reinsurance industry is facing losses in the billions of dollars after major hurricane Melissa’s devastating landfall and passage across Jamaica, while the country’s $150 million IBRD CAR Jamaica 2024 parametric catastrophe bond is likely to face a full loss, ILS investment manager Twelve Securis has said.
In a post-event report, specialist catastrophe bond and insurance-linked securities manager Twelve Securis explained that hurricane Melissa was the strongest storm ever to make landfall in Jamaica and one of only seven in the Atlantic to have reached a central pressure below 900mb.
Twelve Securis said on the landfall, “While Melissa’s landfall as a Category 5 hurricane resulted in catastrophic destruction for communities near landfall, as well as impacts across all of Jamaica from both wind and torrential rainfall, the landfall has occurred farther west than initially forecast, with Kingston (the capital city of Jamaica) spared the worst of the impacts. In comparison, Hurricane Gilbert in 1988, the last major Hurricane to impact Jamaica, made landfall directly south of Kingston (with direct impacts on the key concentration of population and exposure in the capital), before tracking east to west across the south of Jamaica.”
Commenting on the insurance industry impacts, the manager stated, “Initial commentary, and modelling by Twelve Securis, suggest that the insured loss impacts from Melissa could reach into the billions of US dollars with the total economic impact to Jamaica significantly higher.”
In addition, Twelve Securis mentioned the World Bank facilitated catastrophe bond that is now anticipated to make a payout to support Jamaica’s recovery from hurricane Melissa.
“In the Cat Bond Market, the focus is on the IBRD Jamaica 2024 Cat Bond (market weight around 28bps). This parametric structure uses the reported central pressure estimates across a pre-defined grid, which allows for an almost real-time evaluation of potential principal loss,” Twelve Securis said.
Adding that, “Although subsequent data revisions are possible, the combination of landfall intensity and path suggests that a full loss of principal remains the most likely outcome.”
Twelve Securis adds to those in the catastrophe bond market that have indicated a full payout of the cat bond is the most likely outcome. We’ve yet to find anyone who suggests otherwise, but official confirmation is not yet available.
Melissa insured impacts in the billions. Jamaica cat bond full loss most likely: Twelve Securis was published by: www.Artemis.bm
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