Losses to per-occurrence cat bonds from hurricane Helene currently seen as unlikely: Twelve Capital

Hurricane Helene made landfall last night away from more densely populated areas of Florida, in the Big Bend region, but despite extensive damage and significant storm surge, initial industry estimates suggest losses to per-occurrence catastrophe bonds seem unlikely at this time, according to Zurich-headquartered insurance-linked securities (ILS), catastrophe bond and reinsurance investment manager, Twelve Capital.

Helene made landfall as a powerful Category 4 storm with sustained wind speeds of 140 mph and higher gusts, becoming the strongest to hit the Big Bend region since 1851.

It’s very early days in terms of understanding insurance and reinsurance industry losses from the storm, but importantly, the storm shifted away from Tallahassee and made landfall around 10 miles west-southwest of Perry, Florida, so away from large inhabited areas.

“Although widespread damages have already been reported, with significant storm surge along the west coast of Florida, initial estimates suggest losses below the attachment points of per-occurrence Cat Bonds,” says Twelve Capital in a recent event update.

As noted by ILS manager Twelve Capital, the extent of the damage from wind and storm surge impacts will become clearer over the coming days and weeks. After all, the storm hasn’t disappeared, and Helene’s impacts are still being felt in Georgia, Alabama, and South Carolina as it moves inland.

“The area where Helene made landfall is not densely populated, and given the eastward movement of the storm away from Tallahasee, this looks to have reduced the possible total industry impact. Whilst we do not expect any direct impact from this event on our positions, aggregate erosion will be further increased across applicable bonds,” continues Twelve Capital.

Hurricane Helene is the fourth US Gulf Coast landfalling hurricane of the 2024 season, and with a landfall minimum central pressure of 938 mb, it boasts the lowest pressure for a Florida hurricane landfall since Michael in 2018.

Ahead of landfall, on September 25th, Swiss specialist asset manager, Plenum Investments, said that the storm is unlikely to have significant implications for the catastrophe bond market if its track fails to deviate from the forecast path at that time, which it didn’t.

So, while no industry loss estimates have been released since Helene made landfall late yesterday, it appears as though the landfall area will serve to limit losses for re/insurers, with minimal implications for the catastrophe bond market.