2019-09-02 - Av Henrik Sjöholm

Update on Hurricane Dorian

Hurricane Dorian is currently landfalling over the Grand Bahama Island in Bahamas and remains a Category five hurricane with sustained winds of some 80 m/s. The hurricane is now moving slowly westwards and is expected to remain over Bahamas for several hours more. The hurricane has had devastating effects in Northern Bahamas with extreme winds in combination with prolonged exposure and low-lying terrain, which makes the country particularly exposed. The events in Bahamas have, however probably no effect on the cat bond market. The latest forecast from the National Hurricane Center (NHC) indicates that the hurricane will soon turn north and pass just off the Florida east coast in the coming days. This decreases the risk of cat bond impact, but it is important to note that it currently is not possible to rule out a track closer to land or a landfall over Florida. In the latest NHC forecasts, the risk of landfall in Georgia and the Carolinas. The cat bond market covers hurricane risks in these geographies as well, though the risk concentration is significantly lower than in Florida. On the secondary market, price volatility is expected due to the current uncertainty. Prices should recover provided that the hurricane develops according to the latest forecast. We continue to monitor the event and will revert with further information as the situation develops.
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