Irma is a large insurance event, but cat bond impact remains to be seen
Hurricane Irma will be a major insurance event for the insurance and reinsurance industry. AIR Worldwide estimates combined insured losses for the hurricane for the United States will be between USD 20 billion and USD 40 billion. It will also affect the ILS sector. The impact on liquid cat bonds appears to be smaller.
Hurricane Irma made landfall in the Florida Keys as a category 4 storm, and on the west coast of mainland Florida as at category 3 storm. Though hitting the west coast, we saw extensive storm surges on both coasts. As we are witnessing an ongoing event, the situation can still develop, and damage assessment will take some time.
Entropics continuously models risk based on new facts and the possible impacts on the portfolio. New calculations of possible insurance losses are expected be reflected in secondary market pricing, where bonds no longer at risk are also expected to recover. We will publish portfolio assessments and market development as it becomes available.