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These Times Are Over

29 August 2017 by lberuti

Houston was born slightly more than a century ago from the wreckage of a cataclysmic storm, which hit nearby Galveston, then one of the US busiest ports. It is at the center of the region currently hit by hurricane Harvey, which promises once again to test the local economy after drenching the area with more than 36 inches of rain and more expected to come over the next few days. Around 450,000 residents will require assistance and more than 30,000 will probably need to be displaced. Harvey will cause most likely cause more flood damage than Katrina and, even if loss estimates vary widely, many say costs could surpass $100Bln. MUNRE ( Muenchener Rueck ) and SCHREI ( Swiss Re AG ) said it is too early to provide loss estimates, economic or insured. Due to the ongoing bad weather, they reckon it will take weeks before reliable estimates of the losses are available. There was a time when investors would have rushed to buy protection on the biggest re-insurers, but not this time. These companies have proved resilient time and time again. And, even though their risk premia were pushed a bit wider, the moves were contained. While MUNRE’s 5-year CDS closed 2.5bps wider at 34bps, SCHREI’s closed 3.5bps wider at 47bps.