KBRA: Atlantic Hurricane Season Predictions Revised

Kroll Bond Rating Agency (KBRA) released a research report as two of the leading hurricane forecasters reduced their outlooks for the 2018 Atlantic hurricane season. The revised forecast from Colorado State University (CSU) called for below average activity. AccuWeather also reduced its forecast, remaining more in line with historical averages.

The forecast prepared by CSU, one of the leaders and pioneers of hurricane forecasting, estimated 11 named storms, including 4 hurricanes—of which, only 1 will be a major hurricane. The Atlantic hurricane season started on June 1 and runs through November 30.

CSU noted, "The tropical and subtropical Atlantic is currently much colder than normal, and the odds of a weak El Niño developing in the next several months have increased. With the decrease in our forecast, the probability for major hurricanes making landfall along the United States coastline and in the Caribbean, has decreased as well."

The KBRA report said that hurricane landfalls are of the greatest concern for insurers and reinsurers, and the revised data from CSU has significantly reduced landfall chances. Nevertheless, the report said, according to CSU, "It only takes one hurricane making landfall to make it an active hurricane season."

In an email to KBRA, Dr. Phil Klotzbach, a research scientist in the Department of Atmospheric Science at CSU and author of CSU's hurricane forecast reports, clarified, "Atlantic sea surface temperatures and El Niño conditions are mostly unrelated. Both of these conditions currently point towards a less active Atlantic Hurricane Season."

The report also discussed catastrophe reinsurance pricing and capacity, noting that reinsurers have been disappointed in pricing outcomes due to "ample supply and reasonable costs for primary writers" along with ample capacity from traditional reinsurance markets and alternative capital markets.

Complimentary access to the full report, Atlantic Hurricane Season Forecast Reduced, Reinsurance Rates Remain Low, is available on the KBRA website with registration.