Twelve Securis, the specialist insurance-linked securities investment manager, is not anticipating any impact to the World Bank catastrophe bond or any of the firm’s private ILS positions due to losses caused by major hurricane Erick in Mexico yesterday.As we had , Erick rapidly intensified into a major hurricane as it approached landfall on Mexico’s Pacific coast, which for a time put the World Bank facilitated $175 million IBRD CAR Mexico 2024 (Pacific) parametric catastrophe bond on-watch.However, , having risen as it neared the coast, which reduced the risk to the cat bond and left us believing it was unlikely to be affected by the storm.Now, catastrophe bond and ILS investment manager Twelve Securis has confirmed that it does not believe this catastrophe bond faces any threat.

The company explained, “In the cat bond market, the primary exposure to Mexican Pacific storms comes from a single bond issued by International Bank for Reconstruction and Development (IBRD), which features a parametric trigger based on the storm’s reported central pressure.Based on the latest pressure estimates from the designated reporting agent, we do not expect any impact to this bond or to any positions held by Twelve Securis.” Twelve Securis also said it does not anticipate losses from hurricane Erick affecting any of the private ILS positions it holds in its portfolios.“Likewise, no impact is expected to any Private ILS positions managed by Twelve Securis as a result of Hurricane Erick,” the company said.

Private ILS positions typically feature collateralized or transformed reinsurance and retrocession arrangements.Other market sources we’ve spoken with have also told us they believe it unlikely any positions they held would be affected by this hurricane.Hurricane Erick did cause meaningful damage to the region it made landfall in and wider-spread flooding and landslides.

As a result, there will be insured losses and potentially some traditional reinsurance impact, but with the majority of ILS capital deployed higher in reinsurance towers, or having far less exposure to Mexico than to the United States, the effects on this market will be limited at most.It’s worth noting though, that had Erick intensified further or made landfall in an area of greater insured value concentration on the Mexican coast, such as Acapulco, then it would likely have been a different story, with the cat bond perhaps triggered and some ILS other capital perhaps also paying out to assist the country in its recovery from the storm..All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance can be accessed online.

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