Cat bonds have likely escaped Harvey's wrath

While several catastrophe bonds have exposure to areas affected by Hurricane Harvey, it is unlikely any bonds will be triggered by losses resulting from the hurricane, according to S&P Global Ratings.

“Given current loss estimates, we do not anticipate any of the natural catastrophe bonds we currently rate with per-occurrence triggers to be affected,” the rating agency said.

It noted that two natural catastrophe bonds: Residential Reinsurance 2016 Series 2016-I Class 13 and Residential Reinsurance 2017 Series 2017-I Class 13, both are rated BB-, cover losses on an annual aggregate basis, and have exposure in Texas and Louisiana.

“While losses in excess of the franchise deductible ($50 million) are possible, it is too early to determine what the loss attributed to these two bonds will be. Depending on the covered loss amount, we could take a negative rating action,” its said.

“S&P Global Ratings expects more detailed information about personal and commercial insurance losses to emerge in the days and weeks ahead. We expect losses to be spread among many national and regional carriers as well as their reinsurers. While estimates for total insured losses are still preliminary, we expect economic damages from Harvey will dwarf insured losses.”

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