Direct cat bond losses still seen unlikely from Helene, but NFIP bonds monitored: Twelve Capital

Investment manager Twelve Capital has issued an updated event report related to hurricane Helene’s impacts, saying that it still believes direct losses to per-occurrence catastrophe bonds are unlikely, but also notes that it is closely monitoring the NFIP FloodSmart Re cat bonds that cover named storm induced flooding.

Last week, after major hurricane Helene had made landfall in the Florida Big Bend region, Twelve Capital said that despite extensive damage and significant storm surge being seen, the initial industry loss estimates suggested at the time that direct losses to per-occurrence catastrophe bonds were looking unlikely.

The ILS investment managers update from today does not change that outlook too much, but given the expansive rainfall related flooding that spread far inland from hurricane Helene, Twelve Capital is watching the FloodSmart Re cat bonds closely.

In today’s update, Twelve Capital said of the potential impact to the catastrophe bond market, “Given current loss and damage estimates, Twelve Capital does not expect outright losses to per-occurrence Cat Bonds, however it is likely that there will be continued aggregate erosion to a number of bonds.

“Aside from the strongest winds in the Big Bend region, much of the wind damage may fall below the higher named storm deductibles, with most structures built to withstand tropical-storm- force winds.”

But the investment manager added that, “We are closely monitoring the FEMA sponsored bonds that cover hurricane induced flooding.

“The effects of surge, rainfall, and flooding are still ongoing, so it is too early to tell the exact impact, especially given uncertainty with respect to FEMA policies further inland.”

As we reported earlier this week, the significant flooding from rains associated with hurricane Helene throughout southeastern parts of the United States are bringing FEMA’s National Flood Insurance Program (NFIP) reinsurance tower and catastrophe bonds into some focus with investors.

Twelve Capital said it has monitored the development of hurricane Helene and evaluated the potential impact on its ILS portfolios since the storms formation.

Now, the monitoring continues of any ILS or catastrophe bond positions that could potentially be exposed, with the FloodSmart Re cat bonds seemingly the ones raising the greatest need to be watched at this time given the uncertainty over flood claims and lack of clarity so far over the claims the National Flood Insurance Program may pay for Helene and its storm surge and rainfall related impacts.

Also read:

– Hurricane Helene floods over 100k buildings, at least 10k to over 5 feet: ICEYE.
– Hurricane Helene insured losses anywhere from mid-single to even double-digit billions: RBC.
– Florida reinsurance dependency in focus after Helene, with $5bn+ loss expected: AM Best.
– FEMA’s NFIP reinsurance & cat bonds in focus after catastrophic flooding from Helene.
– Hurricane Helene private insurance loss seen mid-to-high single-digit billions: Bowen, Gallagher Re.
– Hurricane Helene economic loss in $20bn – $34bn range: Moody’s Analytics.
– Hurricane Helene insured wind/surge property loss in Florida/Georgia initially said $3bn – $5bn: CoreLogic.
– Losses to per-occurrence cat bonds from hurricane Helene currently seen as unlikely: Twelve Capital.
– Hurricane Helene landfall at Cat 4 140mph winds, Tampa Bay sees historic surge flooding.
– Hurricane Helene industry loss seen $3bn to $6bn if Tampa avoided: Gallagher Re.
– Minimal to no cat bond impact expected from hurricane Helene if track unchanged: Plenum.