Twelve Securis, the specialist catastrophe bond and insurance-linked securities (ILS) investment manager, has explained that it is “cautious, but optimistic about El Niño’s positive influence on risk” for the coming Atlantic hurricane season.In a commentary in advance of the hurricane season and in the wake of early forecasts for levels of storm activity in the Atlantic, Twelve Securis stated that, “there is increasing confidence in a strong El Niño.In fact there is a potential for one of, if not the strongest, El Niño on record.” Adding, “This is of particular importance to ILS investors.” El Niño, which is the warm phase of the El Niño–Southern Oscillation (ENSO) is known to exert a strong influence on weather in the tropics around the world.“In the Atlantic, El Niño suppresses storm activity through stronger upper-level westerly winds (i.e.

increased vertical wind shear) as well as generally increased atmospheric stability,” Twelve Securis explained.With El Niño a meaningful factor in forecasters views of the potential for Atlantic tropical storm activity, the ILS manager notes that the recent early seasonal forecasts are “suggesting increasing confidence in below-average, and in some cases significantly below-average, activity during the 2026 season.” As we’ve reported, .However, those forecasts don’t mean there won’t be any hurricane impacts this season.

It only takes one major storm to make landfall in a region of high insured values and exposure concentration to create meaningful losses for the insurance, reinsurance and ILS industry.Hurricane Andrew was one example of a major storm that drove meaningful damage and insured losses during an El Niño, but Twelve Securis explains that hurricane Betsy is perhaps a better cautionary example.“The 1965 hurricane season was driven by a strong El Niño developing from a winter La Niña, just as expected for 2026.

Betsy’s impacts in Louisiana set the record 60 years ago as the first hurricane to exceed a billion dollars in damages.A repeat of Betsy today would likely be in the range of $50+ billion in insured losses,” the ILS manager points out.Specialist ILS investment manager’s, such as Twelve Securis, take numerous climate and weather factors into account when considering their portfolio construction and positioning and with hurricane still the major peril exposure in the ILS market, this analysis is critical.

Twelve Securis said, “Robust quantification of how climate factors, such as El Niño, as well as global and local ocean temperatures, change the risk profile of a well-constructed, geographically diversified portfolio of ILS has been a key focus of Twelve Securis’ research for multiple years, and our toolbox continues to evolve.Major vendor model updates being released later in 2026 will, for the first time, include explicit representation of the state of the climate within their models; collaboration with leading academics provides insights into the state of the science; and long-standing relationships with climate-connected risk modellers provide us with an established framework.” Adding that, for 2026, “Twelve Securis’ view of the upcoming season remains cautious, but optimistic about El Niño’s positive influence on risk.” With the outlook being for a potentially quieter hurricane season, in terms of storm numbers, but still with warm sea surface temperatures in many key regions of the Atlantic basin and Gulf of Mexico, caution is necessary.As Twelve Securis highlights, there have been seasons where El Niño exerts its influence on storm numbers to reduce the number of storms that form, but still the season can end up impactful and costly.

In 2026, there are a number of factors that could amplify any storms that do form, not least the expectation for still warm sea temperatures in coastal areas of the United States and an expectation for a moderately warm Main Development Region (MDR) of the Atlantic.So caution is warranted, even while there is reason to be optimistic that the number of hurricanes may prove lower than recent years.Storm numbers do not themselves translate into losses, hence the cautious approach remains the right one for the global ILS industry, as it takes just one to drive impacts to property and lives..

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