At around 4am local time a magnitude 7.8 earthquake struck southeast Turkey in the province of Kahramanmaras, causing widespread destruction and tragedy in neighbouring provinces and northern Syria.
Currently the loss of life is in the hundreds, and expected to rise as recovery efforts progress, in addition there appears to be extensive damage to buildings in the affected areas. It is too early to tell the full extent of the damage, but we will continue to monitor the situation as it progresses.
In general Turkey has a relatively high protection gap, i.e. where the difference between economic losses and insurance losses is large, meaning that in catastrophic events it is probable that many buildings will not have any/enough insurance cover. This means that while the economic loss from this event could be high, the insured loss might not be.
There is a minimal amount of Turkey exposure in the Cat Bond market in some global aggregate bonds, most of which had reset recently amounting to around 1% of the overall market size. Also, exposure in Private ILS contracts at Twelve Capital appears very limited. We do not expect any impact on Twelve Capital managed products, but due to the ongoing nature of this event we will keep monitoring the situation.