Friday, April 15, 2016

La Niña and the Hurricane Season

One of our ideas for later in the hurricane season (June 1-November 30, peak Sept. 10) is to bet against the insurers and reinsurers. Some of the P/C insurers with East Coast exposure: CB; TRV; ALL; HIG; SIGI.

From the Washington Post:

Outlook: Death of El Niño boosts chance of busy hurricane season compared to last year
The 2016 Atlantic hurricane season is a few short weeks away, and as it has done every year since 1984, Colorado State University (CSU) has released its predictions for the upcoming season. 
The initial forecast is for a total of 12 named storms, 5 hurricanes and 2 major hurricanes, which is very close to the long-term average of 12 named storms, 6 hurricanes and 2 major hurricanes. 
The 2015 Atlantic hurricane season was slightly below normal, as hostile winds from El Niño depressed tropical activity. 
[Forecast groups nailed the 2015 hurricane season, thanks to El Niño] 
El Niño’s demise is one of several factors that CSU considered in developing its outlook for a more active season this year, as discussed in detail below. 
El NiñoEl Niño, characterized by warmer-than-normal waters in the eastern and central part of the tropical Pacific, is an important predictor for hurricane activity because it generates stronger upper-level westerly winds that can tear storms apart in the tropical Atlantic and Caribbean. 
This year’s El Niño event, which reached historic levels this winter, is now in decline. The characteristic warm anomalies are still evident when looking at a map of SST anomalies of the Pacific basin (below), but they have faded since the winter....MUCH MORE
La Niña May Be Approaching Faster Than We Thought
Re/insurance: "El Niño in decline but impacting global weather, ~50% chance of La Niña"