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ILS managers breathe easier after Hurricane Beryl

Limited impact on insurance-linked securities firms: Hurricane Beryl lashes southern Jamaica on Wednesday with category 4 winds, killing two people (Reuters photograph)

Hurricane Beryl did not impact local insurance-linked securities firms as much as initially feared, one industry insider has said.

Before Hurricane Beryl reached Jamaica on Wednesday, some ILS asset managers were predicting a $150 million hit.

They also foresaw the triggering of the International Bank for Reconstruction and Development catastrophe bond for Jamaica, to help clean up afterward.

But Mitchell Rosenberg, managing director of Howden Capital Markets & Advisory, said the impact to the industry was likely to be more limited than expected.

“This is especially true for the International Bank for Reconstruction and Development catastrophe bond Jamaica and Mexico,” he said.

“As Hurricane Beryl continues on its path, ILS managers are actively monitoring both the secondary market and prospective hedges, as they assess rebalancing their portfolios amid an already active hurricane season,” Mr Rosenberg said. “We are also seeing an increase in other investors seeking to exploit market volatility.”

He said Hurricane Beryl highlighted the importance of catastrophe bonds in mitigating economic impacts, while supporting rapid recovery and sustainability.

Hurricane Beryl was downgraded to a category 2, but hammered Mexico’s Yucatan Peninsula, including Cancun and Cozumel.

Three months ago, Mexico renewed its World Bank facilitated catastrophe bond.

The country’s government secured $125 million of cover from the Class C notes issued with the IBRD CAR Mexico 2024 cat bond issuance – the layer of protection potentially exposed to Hurricane Beryl.

Over the last week, Hurricane Beryl broke numerous records, including third-earliest ever major Atlantic hurricane and the earliest-ever category 5.

Leaving a trail of destruction across the Caribbean, the category four storm flattened Union Island in St Vincent and the Grenadines and killed at least seven people in the region.

The next day, still a category 4 storm, it raked southern Jamaica, killing two. It had weakened further to a strong category 3 when it brushed the Cayman Islands, before heading to Mexico.

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Published July 05, 2024 at 11:54 am (Updated July 07, 2024 at 4:54 pm)

ILS managers breathe easier after Hurricane Beryl

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