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Others Will Follow Harvey

06 September 2017 by lberuti

The extent of the damages caused by hurricane are not fully known yet, and the US are already bracing themselves for the next storm: Irma. It could reach Florida as early as Saturday, and its destructive potential is clear after it swept over islands in the Caribbean. It is the most powerful storm to form in the open Atlantic Ocean, and it has wreaked havoc on the French islands of Saint-Barthélemy and Saint-Martin. They were hit by 12-meter waves and top winds were holding at more than 185 miles (300km) an hour, making the system a category 5 storm, the highest measure on the 5-step Saffir Simpson scale. According to witnesses, the arrival of Irma was best described as the explosion of a bomb. It is therefore not surprising that investors started to ask questions about the potential impact on reinsurers which are bearing most of the risks if damages in the US were to mount substantially. If the CDS referencing the senior debt of MUNRE ( Muenchener Rueck ), SCHREI ( Swiss Re AG ), and HANRUE ( Hannover Rueck ) were all marked wider at 37bps (+5bps), 50bps (+5bps) and 38bps (+4bps) respectively, CDS referencing their subordinated debt bore the brunt of the widening at 90bps (-14bps), 107bps (+15bps) and 95bps (+15bps) respectively.