Update on Hurricane Michael
Hurricane Michael is expected to make landfall near Panama City in Northwestern Florida on Wednesday evening (CET). Before landfall, the hurricane is expected to intensify and to make landfall as a Category 3 hurricane, with large potential losses from winds, torrential rain and storm surges. Based on currently available modelling data, no portfolio cat bonds are expected to trigger.
The region between Panama City and Tallahassee is not as densely populated as the southeastern parts of Florida, but losses could nevertheless be substantial. Based on available forecasts and modelling data, the insured losses can be estimated at up to $3 billion.
Michael was formed from a low pressure in the Bay of Honduras in the past weekend and has since passed across the Gulf of Mexico, where sea surface temperatures at 1-2 degrees Celsius have created beneficial conditions for intensification.
The extent of losses could vary greatly, even with small differences of intensity and trajectory, why current estimates could change. If necessary, Entropics will publish additional updates on the hurricane and potential impact on the cat bond market.