Variance of loss potential at its highest for Hurricane Dorian

Early estimates put industry losses relating to Hurricane Dorian at between $15 billion and $25 billion, according to ILS Advisers.

With Hurricane Dorian being the first significant event of this year’s hurricane season, the variance of loss potential is at its highest, explained ILS Advisers. A Category 3 storm will predominantly erode inner deductibles of aggregate contracts, with less direct impact on reinsurance and retrocession occurrence layers. But a category 4 and above type event would typically begin attaching and impacting reinsurance and retrocession layers directly.

But ILS Advisers said it has strategically repositioned its portfolio in recent months to increase geographical and peril diversification, which it said has lowered its exposure US wind relative to previous years.

“As we approach the 1/1 renewal year, we are continuing to re-engineer the portfolio towards our targeted position,” it said.

“We are continuously monitoring and tracking this event, working together with those we are invested with, as well as our partnering modeling firm, to quantify the likely impact on the portfolio,” said ILS Advisers. It is also closely monitoring and communicating with the live cat market for opportunities to proactively respond, it added.

The latest forecasts suggest Dorian will make landfall late Sunday or early Monday as a Category 2 to 4 status, meaning wind speeds of up to 132mph. It is expected to pass over northern parts of the Bahamas before turning left towards Florida.