No impact to our cat bond funds expected from hurricane Debby: Plenum

As hurricane Debby slowly moves inland over the Florida Panhandle and into Georgia and beyond, specialist catastrophe bond fund manager Plenum Investments has said it does not expect insured losses from the storm will negatively affect its cat bond funds.

As we have reported, hurricane Debby formed over the weekend and is then made a category 1 strength landfall in the Florida Big Bend region.

With sustained winds of around 80 mph at landfall and stronger gusts, Debby is not an especially intense hurricane and the limited time it had over the very warm Gulf of Mexico waters has saved the region of Florida from greater impacts.

Rainfall remains a key focus, with hurricane Debby expected to soak Florida first but then drop 15 to 30 inches of rainfall in parts of Georgia and the Carolinas, creating a severe flooding threat and a chance of their being more significant economic losses than insurance market impacts.

Plenum Investments noted in an update that, “Tropical Storm Debby has developed into a category 1 hurricane and is going to make landfall in Florida’s big bend area today, a sparsely populated region.”

The catastrophe bond fund manager continued by saying that, “It is highly unlikely that Debby will generate substantial insured losses and we do not expect any implications on CAT bonds or the performance of our funds.”

With hurricane Debby perhaps set to create more economic loss costs from water than wind, given the high rainfall levels now anticipated, most cat bonds do not carry significant flood related exposures.

For those that are flood risk focused, as we also said earlier today, it would take a particularly significant flood event to occur for any of the outstanding tranches of the NFIP’s FloodSmart Re catastrophe bond program to attach and face any losses.

As ever, there is always the potential for any insurance market loss event that creeps into the billion dollar region to cause some erosion to exposed aggregate cat bonds.

But for the market in general, given the Category 1 and now weakening strength of hurricane Debby, it seems unlikely this will cause significant issues to aggregate positions either, at this time, unless the flood threat creates really significant impacts and the transactions had particularly concentrated exposure to the regions being affected.

You can track this and every Atlantic hurricane season development using the tracking map and information on our dedicated page.