Tuesday, November 30, 2010

Hurricane season draws to a close, Insurers/Reinsurers Score Big (BRK.B; ALL; TRV)

From Wunderblog:
November 30 marks the final day of the 2010 Atlantic hurricane season--a strange and highly active season. While it was an exceptionally active year, with 19 named storms, 12 hurricanes, and 5 intense hurricanes, deaths and damages were far below what one would expect from so much activity. To me, this year is most memorable for what didn't happen--we did not get a full fledged hurricane rip through the Deepwater Horizon oil spill, nor did a devastating hurricane cause massive loss of life in Haiti's vulnerable earthquake zone. However, two hurricanes from this year are virtually certain to get their names retired--Tomas and Igor--and two other storms that did billions of damage to Mexico, Karl and Alex, are likely to have their names retired, as well.

The 19 named storms, 12 hurricanes, and 5 intense hurricanes were 198%, 203%, and 217% of the 1950-2000 average for named storms, hurricanes and major hurricanes, respectively. The nineteen named storms ties 2010 with 1995 and 1887 for 3rd place for most number of named storms in an Atlantic hurricane season. Only 2005 (28 named storms) and 1933 (21 named storms) were busier (Atlantic hurricane records go back to 1851, though there were likely many missed named storms prior to the beginning of satellite coverage in the mid-1960s.) This year also featured twelve hurricanes, tying 2010 with 1969 for second place for most hurricanes in a season. The record is held by 2005 with fifteen hurricanes. The five major hurricanes this year puts us in a tie for ninth place for most major hurricanes in a season. This year's Accumulated Cyclone Energy (ACE) index was 163, putting it in 13th place for ACE since 1944. A "hyperactive" hurricane season is considered to have an ACE index of >175% of the median. According to Wikipedia, median ACE measured over the period 1951–2000 for the Atlantic basin was 87.5, so 2010 is a hyperactive year by that definition (183% of the median.)

Friendly steering currents for the U.S.
As active as the 2010 season was, only one weak tropical storm made a direct landfall on the U.S. (Tropical Storm Bonnie, which hit South Florida in August as minimal tropical storm with 40 mph winds.) During the 15-year active hurricane period from 1995 - 2009, 33% of all named storms in the Atlantic hit the U.S., and 30% of all Atlantic hurricanes hit the U.S. at hurricane strength. Thus, the U.S. should have expected the landfall of six named storms, four of them being hurricanes, and two being intense hurricanes. So, the U.S. really lucked out this year. For comparison, here's how the U.S. fared in the four other hurricane seasons as busy or more busy:

2005: 28 storms, 7 hit the U.S. (5 were hurricanes, and 4 of those major huricanes)
1933: 21 storms, 7 hit the U.S. (5 were hurricanes, and 3 of those were major hurricanes)
1995: 19 storms, 5 hit the U.S. (2 were hurricanes, and 1 was major)
1887: 19 storms, 5 hit the U.S. (3 were hurricanes, no majors)

We had twelve hurricanes in the Atlantic in 2010, yet none of them struck the U.S. Since 1900 there is no precedent of an Atlantic hurricane season with ten or more hurricanes where none has struck the U.S. as a hurricane. The eleven previous seasons with ten or more hurricanes--1870, 1878, 1886, 1893, 1916, 1933, 1950, 1969, 1995, 1998, and 2005--each had at least two hurricane strikes on the U.S. Since hurricane Ike (2008), there have been eighteen consecutive non US-landfalling hurricanes. Such a sequence last happened between Irene (1999) and Lili (2002), with 22 consecutive non US-landfalling hurricanes, and between Allen (1980) and Alicia (1983) with seventeen consecutive non US-landfalling hurricanes (thanks go to Adam Lea of tropicalstormrisk.com for these stats.)

No major Category 3 and stronger hurricanes have hit the U.S. since Hurricane Wilma of 2005. This is just the third such major hurricane drought since 1851. The other two such 5-year major hurricane droughts were 1901 - 1905 and 1910 - 1914. Also, 2010 is the only year besides 1951 when there have been five major hurricanes in the Atlantic, and none have hit the U.S. (1958 is also listed as such a year, but preliminary results from a re-analysis effort shows that Hurricane Helene hit North Carolina as a major hurricane that year.) There has never been a six year period without a U.S. major hurricane landfall.

The reason the U.S. got so lucky--and that Canada and Mexico took a much more severe beating than usual--was that the Azores/Bermuda high was farther east than usual, and there were more strong troughs of low pressure over the U.S. East Coast than usual. In addition, there was stronger high pressure than usual over the U.S. Gulf Coast, which deflected Caribbean storms into Mexico....MORE
No U.S. landfalls. Just pocket those premiums and mosey on down the road.