New Year’s Day Japan Earthquake
At approximately 4 p.m. local time on New Year’s Day, Japan experienced a magnitude 7.6 earthquake near the Noto Peninsular, in the Ishikawa Prefecture. Early reports indicate that the majority of the damage has been experienced in small surrounding cities such as Wajima, Suzu and Nanao, with reports of building collapses, widespread fires, broken water mains and landslides.
The initial major concern was that an ensuing tsunami could cause significant damage across coastal areas, which lead to the first major tsunami warning since the 2011 Tohoku Earthquake and the evacuation of over 50,000 people. This warning has since been downgraded, and whilst smaller tsunami waves have caused damage across the coast, the impacts have been smaller than initially feared.
Earthquake intensity measured by MMI. Source: USGS.
Despite the reported damages, given the event has not materially impacted the larger cities, our expectation is that there will be no direct losses to any Twelve Capital positions. The peril Japan Earthquake is a relatively small proportion of the Cat Bond market, however, there are aggregate structures that will likely experience some loss erosion, so we will continue to monitor the impact on these positions.