Evaluation by disaster bond fund supervisor Plenum Investments means that the cat bond market is implying a roughly $30 billion {industry} loss from the Los Angeles, California wildfires, whereas additionally reporting that the Swiss Re Cat Bond Whole Return Index fell -0.27% for the final week.
Updating buyers and shoppers on the consequences the California wildfires have had on the disaster bond market, Plenum Investments continues to imagine the general influence to the cat bond market might be restricted.
This echoes the earlier replace from the cat bond fund supervisor, from January ninth, that said there could be a marginal impact on the catastrophe bond market from the fires.
In its replace at the moment, Plenum stated that, “The CAT Bond market has reacted to the continued occasions and costs of round eight CAT Bonds have been marked down particularly.”
Including, “A short take a look at a number of the industry-index linked CAT Bonds exhibits that the CAT Bond market is at the moment implying a USD 30bn loss to the insurance coverage {industry}.”
Plenum Investments then additionally highlighted that the cat bond market index, the Swiss Re Cat Bond Whole Return Index, fell -0.27% for the final week.
The funding supervisor additionally famous the next strikes for its personal methods: Plenum CAT Bond Dynamic Fund: +0.05%;
Plenum CAT Bond Defensive Fund: -0.17%; and Plenum Insurance coverage Capital Fund: -0.43%.
“Plenum Insurance coverage Capital Fund and Plenum CAT Bond Defensive fund are holders of one of many affected CAT Bonds, Topanga Re, which is a CAT Bond that insures Farmers Insurance coverage towards losses exceeding round USD 2bn on a single occasion foundation,” the corporate stated.
The Topanga Re cat bond was one of those we highlighted as having seen its price decline in the secondary market after the wildfires.
We’ll report additional on the newest actions of uncovered disaster bonds within the coming days, as any new info turns into obtainable to us.
“With a market share in California of round 10% the market considers the bond to be uncovered,” Plenum defined.
The corporate famous that its Plenum Insurance coverage Capital Fund has a 0.59% publicity to the Topanga Re cat bond, whereas its Plenum CAT Bond Defensive Fund has a 0.34% publicity to the bond.
Plenum Investments additionally identified that subrogation may turn into related if the reason for the wildfires have been to be deemed all the way down to electrical utility infrastructure, whereas the FAIR Plan assessments may elevate the {industry} loss and these wildfires are an ongoing occasion, that means info is topic to vary.
It’s vital to notice that the strikes in cat bond valuations and the market index are based mostly on estimates for potential erosion of combination attachments or publicity and must be thought-about mark-to-market at this stage, with no precise losses suffered to this point.
Additionally learn:
– LA wildfires: 17,027 structures damaged or destroyed. Insured loss estimates avg $32.5bn.
– LA wildfires: Moody’s RMS estimates insured losses to-date of $20bn to $30bn.
– LA wildfires: Gallagher Re estimates industry insured losses at $20bn to $30bn.
– LA wildfires: CoreLogic initial insured loss estimate is $35bn to $45bn.
– Alternative capital can provide wildfire capacity, but pricing a sticking point: Morningstar DBRS.
– Stone Ridge marks mutual cat bond / ILS funds the most on LA wildfires.
– Euler ILS Partners puts wildfire industry loss at $15bn-$17bn, highlights BI / ALE uncertainty.
– Wildfire losses may cause re/insurance pricing to firm as payback sought: Berenberg.
– BMS says LA wildfire insured losses likely to exceed $25bn. KBW analyses up to $40bn.
– Autonomous raises its LA wildfire loss estimate to $25bn, $18bn from Palisades fire.
– California wildfires: Subrogation topic raised, as utilities come into focus.
– ICEYE satellite analysis: Over 10,900 buildings likely destroyed in Palisades and Eaton fires.
– Catastrophe bond price movements due to LA wildfire exposure.
– Evercore ISI: LA wildfire insured loss $20bn-$25bn. Could be one event under reinsurance.
– LA wildfire losses to “notably exceed” $10bn, could approach $20bn: Gallagher Re.
– Mercury says LA wildfire losses to exceed reinsurance retention.
– LA fires: “Considerable attachment erosion” likely for some aggregate cat bonds – Steiger, Icosa.
– LA wildfires: Over 10k structures destroyed. Insured losses up to ~$20bn, economic $150bn.
– LA wildfire losses unlikely to significantly affect cat bond market: Twelve Capital.
– LA wildfires unlikely to cause meaningful catastrophe bond impact: Plenum Investments.
– JP Morgan analysts double LA wildfire insurance loss estimate to ~$20bn.
– LA wildfires: Analysts put insured losses in $6bn – $13bn range. Economic loss said $52bn+.
– LA wildfires bring aggregate cat bond attachment erosion into focus: Icosa Investments.
