Hurricane Dorian
Dorian has missed the mainland of North Carolina, having previously also avoided landfall in Florida. The eye of the storm briefly touched land near Cape Lookout as a category 1 hurricane on Friday 6 September, but did not make full landfall in any high value areas. The storm has in the meantime passed Nova Scotia, Canada and is expected to fully dissipate over open water in the next couple of days.

Given its close proximity to the US coastline for several days, Dorian will have probably still caused extensive damage from wind and storm surge across Florida, Georgia and the Carolinas. It is unlikely that these will cause major concerns for the ILS portfolios managed by Twelve Capital, based on current industry loss estimates:
- USD 1bn to USD 3.3bn with an estimated average loss of USD 1.5bn for losses caused in the US.
- USD 0.8bn to USD 4.5bn for insured losses in the Bahamas and a corresponding estimated average loss of USD 2.5bn.

It should be noted that in the Bahamas various sources indicate that the economic damage may be more than double the insured losses thereby reaching up to USD 8bn. 

Typhoon Faxai
In Japan, Typhoon Faxai has made landfall as a category 3 according to the Joint Typhoon Warning Center (JTWC) with sustained winds of ca. 180 km/h near Chiba City (Prefecture of Chiba) just east of Tokyo, in the early hours of 5 a.m. Japan Standard Time, i.e. around 10 p.m. Sunday night Eastern European Time.

Typhoon Faxai caused power outages in the Tokyo region affecting more than one million people. Despite the strong winds with potential to cause a reasonable amount of damage, initial reports found in international news publications so far indicate moderate damage to property and cars from wind and flooding. Preliminary modelling figures indicate a wide range of possible outcomes, from very little damage (less than USD 200m insured losses) up to mid double digit USD bn insured market losses, with corresponding significant uncertainty about the ultimate impact.

Notably, Tokyo is a modern and largely well-constructed city with flood and surge protection infrastructure that reduces the vulnerability against storm surge and flood. However, it is currently too early to suggest a reliable view on the impact of this event on insured values. The storm system is currently moving back eastwards out to the sea where it is expected to weaken and dissolve over the next few days.
Twelve Capital continues to monitor closely the impact of this event and will issue corresponding updates as soon as more accurate and more reliable estimates about insured losses are available.

Please click on the link below for the track of Typhoon Faxai (source: Joint Typhoon Warning Center (JTWC)).

Track Typhoon Faxai

Other recent events
Typhoon Lingling
Typhoon Lingling has moved across South- and North Korea during the weekend. It made landfall on the island of Jeju as a category 1 hurricane on the Saffir-Simpson Wind scale and killed at least three people in South Korea. The damage in North Korea is unknown at this point, due to restrictions on media reporting. Overall, Twelve Capital does not expect this event to impact ILS portfolios.

Monday, 9 September 2019

Summary

The fourth tropical storm in this year’s Atlantic hurricane season, Dorian, has formed around 600km Southeast of the Lesser Antilles. The system is expected to gradually strengthen into a category 1 hurricane by Wednesday with a trajectory towards the Dominican Republic. Afterwards, the current forecast expects the system to decay and to weaken into a much less powerful tropical depression. Should these forecasts turn out to be accurate, Twelve Capital does not expect any significant impact on the ILS market.

Another tropical depression East off the coast of Georgia could potentially strengthen into a weak tropical storm by Tuesday, but is expected to head Northeast into the Atlantic Ocean anyways with no impact expected.

Further information has been released on Typhoon Lekima, which recently made landfall in China as a category 2 typhoon. The economic loss estimates have been updated to about USD 7.6bn, while the insured loss was recently put at USD 855m (source: AIR Worldwide). At this point in time, Twelve Capital does not believe that this will have a significant impact on its portfolios.

In the Pacific a few hundred kilometres from the coast of Mexico, Tropical Cyclone Ivo has weakened over the weekend to a tropical depression with maximum sustained winds not exceeding 50 km/h. The storm is forecasted to get even weaker and to dissipate over the next days.

Furthermore, Tropical Storm Bailu hit Taiwan with large amounts of rain. Bailu is currently no longer a tropical storm but still has large rainfall potential for China over the coming days. No significant impact on the ILS market and on Twelve Capital Funds is expected.

Other recent events

No other events have occurred since the last publication that would call for investor attention.

Monday, 26 August 2019

Summary

No new natural catastrophe events took place over the last two weeks that would be expected to cause major insured industry losses.

As the peak Atlantic hurricane season 2019 begins, there have been several updates to forecasts of the number of named storms. The National Oceanic and Atmospheric Administration (NOAA) has slightly updated its May forecast to 10-17 named storms, 5-9 hurricanes and 2-4 major hurricanes (Category 3+) during the season. This takes into consideration the two named storms (Andrea and Barry) which have already occurred.

Other recent events

The following noteworthy natural events recently occurred during early August although, at present, either these events are not expected to have a significant impact on Twelve Capital’s portfolios, or insured loss estimates have not yet been issued.

Typhoon Lekima
This storm made landfall in Zhejiang province, China, more than 300 km south of Shanghai on 9 August as a category 2 typhoon with winds recorded of 175 km/h. In the province of Zhejiang, over a million people were evacuated. Several dozen people died or are still missing. Over 30'000 houses appear to have been damaged. Since making landfall, Lekima has been downgraded to a tropical storm moving north/north-eastwards in China. The risk of heavy rains, flood and landslides continues.

Initial estimates from various media sources indicated economic losses in range of USD 2.0-2.6 billion. As the event is still ongoing, these initial estimates should be taken with a corresponding degree of caution. Having said this, the so-called protection gap, i.e. the difference between the economic damage and the insured loss, is generally significant in China, so the actual insured loss from Typhoon Lekima is expected to be materially lower.

Typhoon Francisco
This category 1 typhoon made landfall in Japan on 5 August near Miyazaki. Typhoon Francisco has injured at least two people and caused significant travel disruptions, according to local media. Peak wind speeds of 142.6 km/h were reported in Miyazaki. Heavy rainfall and localised flooding in Japan as well as South Korea left people injured and disrupted local transport but no major damage to property has been reported so far.

Luxembourg Tornado
A tornado damaged around 160 buildings in Luxembourg over the course of the weekend. Strong tornadoes are relatively rare in western Europe hence this event has received considerable media attention. Nevertheless, the economic damage and the impact on reinsurance contracts is likely to be minimal with no impact expected on ILS funds.

Monday, 12 August 2019