Sunday, July 9, 2023

Hurricane Watch: Colorado State University Raised Their Forecasted Number Of 'Canes And Landfalls

 From the cat bond/ILS/reinsurance mavens at Artemis, July 7:

2023 hurricane forecast raised again by CSU, higher landfall probability seen

Colorado State University’s tropical meteorology team led by Phil Klotzbach is anticipating a more active 2023 Atlantic hurricane season, with its latest update increasing the number of hurricanes it predicts by 2, with 1 of those expected to become a major hurricane.

It’s now the second time that the Colorado State University (CSU) forecast has been raised for the 2023 hurricane season.

Back in April, the CSU tropical forecast team forecast the season would see 13 named tropical storms, 6 hurricanes and 2 major hurricanes, generating an accumulated cyclone energy (ACE) of 100.

That was below the near-term 1991 – 2020 average of 14 named storms, 7 hurricanes and 3 major hurricanes.

At June 1st, the team incorporated the one unnamed subtropical storm that formed in the Atlantic in January, but also lifted each type of storm by one in its next forecast update.

So, as of the first official day of the Atlantic hurricane season, the CSU forecast was for 15 named tropical storms (so 14, minus the one pre-season subtropical event), with 7 of these expected to become hurricanes (so now increased by one), and 3 major hurricanes of Category 3 strength or greater predicted (again an increase of one).

Now, fast forward another month or so and the particularly warm Atlantic sea surface temperatures (SST) have driven the forecast team to lift its forecast even higher.

Late yesterday, the CSU forecast team gave their latest forecast update, for 18 named tropical storms (so 17, minus the one pre-season subtropical event), with now 9 of them expected to become hurricanes (so increased by 2 more), and now 4 major hurricanes of Category 3 strength or greater predicted (increasing the major hurricane forecast by 1).

The Accumulated Cyclone Energy forecast had jumped to 125 on June 1st, but yesterday’s update lifted it to 160.

This is now a forecast for an above average Atlantic tropical storm and hurricane season, quite the change over the months since April and a reasonable increase in just the last month....


For what it's worth, catastrophe bonds are proving to be a very decent investment this year (so far):

Swiss Re cat bond Index delivers highest half-year return ever at 10.34%

And if interested see June 22's "Catastrophe Bonds; Reinsurance: 'City of Zürich Pension Fund ILS allocation surpasses $700m'"
There's some information embedded in this position. As we noted in the introduction to a 2021 post on the city doubling their exposure to cat bonds/Insurance Linked Securities:

The next time Munich Re starts moaning about climate change and how we're all going to die, or at minimum go broke, just remember reinsurance/cat bonds are a for-profit business and that some folks a couple hundred miles southwest of München, who might have access to some very sharp minds in the reinsurance/cat bond business, seem to think this is a profitable place to put some longer term money....

When one sees an informed investor not just making the bet but pressing it, one takes notice.