Yesterday, an intense earthquake with a magnitude of 8.0 occurring at a depth of 110km struck Peru (Source: USGS). Initial information reported indicate that the earthquake resulted in structural damage to buildings and infrastructure, and has killed at least one person whilst injuring many more.
Fortunately, the earthquake’s epicentre is located in a sparely populated area of the country away from the larger cities, which has mitigated the overall economic impact. However, shakes could still be felt hundreds of miles away.
At this point, Twelve Capital expects only little impact on its Cat Bond and Private ILS strategies. The only Cat Bond potentially exposed to this event is an IBRD-sponsored Cat Bond, which Twelve Capital estimates to lose 30% of notional from this event. Most portfolios at Twelve Capital have little or no exposure to this particular bond, so that the overall impact on investor performance is expected to be minimal at this point.
Twelve Capital continues to monitor the situation, and will give further updates should the situation change materially.
Monday, 27 May 2019