During the second half of February, winter storm Uri caused widespread chaos and damage in the USA. Especially Texas was hard hit. First estimates of risk modelling firms put the insured losses in excess of the cost from the wildfires and hurricanes of the last years since 2017.
Because of the the uncertainty involved in this event, bid-ask spreads in the Cat Bond market widened considerably at the end of February, inflicting valuation volatility throughout the ILS universe. However, in many cases the swings seemed exaggerated and the management team expects healthy recoveries on many bonds. Some aggregating transactions, however, which had already been under pressure because of previous events, might now incur losses to their principals
The cause of the winter storm events across the U.S. was a large-scale atmospheric phenomenon called the Arctic Oscillation. This Arctic Oscillation
was negative all season and reached its peak value around mid-February. When it is negative, it favours a weaker, more meandering jet stream,
allowing cold arctic air masses that usually remain at latitudes of Southern Canada or Chicago to move substantially farther south. The freeze peril
often leads to damage from water resulting from burst pipes, causing significant water spillage that requires extensive repairs.
For further information please refer to the documents below.