Atlantic – Hurricane Isaias

Hurricane Isaias developed in the southwestern Gulf of Mexico on 7 October as a tropical storm before intensifying into the first Atlantic hurricane of the season on 8 October. It is currently tracking northwards as a Category 2 hurricane and is forecast to strengthen to Category 3 as it moves over warm waters in the Gulf of Mexico. Landfall is expected late on 9 October or early on 10 October, potentially as a Category 2 or strong Category 1 hurricane, somewhere between Mobile, Alabama and the western part of Florida Panhandle. The most likely landfall location is currently near to Pensacola, Florida.

While rapid intensification before landfall remains possible, increasing wind shear and dry air near the coast are expected to limit further strengthening. Storm surge is likely to be a significant driver of insured losses along the northern Gulf Coast and Florida Panhandle, potentially exacerbated by high tide at landfall. Current forecasts indicate storm surge levels of up to 1.5-2 meters in the Mobile Bay and western Florida Panhandle. Heavy rainfall could also contribute to losses, with precipitation of 100-200 mm forecast over already saturated ground.

Historical events with comparable tracks and intensity profiles include Hurricanes Sally (2020), Erin (1995) and Opal (1995). Category 1 hurricanes making landfall in this region have historically generated industry losses ranging from hundreds of millions to low-single digit billions of US dollars, while Category 2 events have resulted in losses in the low- to mid-single digit billions.

Based on current forecasts, an outcome comparable to Hurricane Sally, with insured losses in the mid-single digit billions of US dollars, is considered the most likely scenario. However, considerable uncertainty remains regarding the precise landfall location and intensity. Should Isaias strengthen more than anticipated, a scenario closer to Hurricane Opal, with insured losses exceeding USD 10bn, cannot be ruled out, although this is currently considered less likely.

Pacific – Hurricane Simon

The Pacific has accounted for most tropical cyclone activity this season, a trend that has continued with Hurricane Simon in the Eastern Pacific.

Simon developed into a tropical storm on 7 October before intensifying to a hurricane on 9 October. Currently a Category 1 hurricane, it is forecast to strengthen to a Category 4 by 10 October, bringing potentially significant wind, storm surge and rainfall impacts on parts of Mexico’s west-central coast.

Landfall is expected in the state of Jalisco as a Category 3 hurricane, with the storm forecast to pass over or near Puerto Vallarta shortly afterwards. Rainfall accumulation of 200-400 mm could lead to significant flooding.

While Simon has the potential to cause substantial localised economic damage, particularly, if it maintains its intensity near Puerto Vallarta, the impact on the reinsurance industry is currently expected to remain limited.

As always, Twelve Securis continues to closely monitor any catastrophe events and will issue specific updates on any relevant new major events which occur.

Please feel free to contact us with any questions.

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Twelve Securis