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A tale of two oceans as 2015 hurricane season ends

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The U.S. mainland escaped the 2015 hurricane season without any major storms making landfall, stretching to 10 years the period in which no major hurricanes have hit it.

A strong El Niño weather pattern limited storm activity in the Atlantic and led to a record number of major hurricanes, but little property damage, in the Northeast Pacific during the 2015 hurricane season, which ended Nov. 30.

The lack of hurricane losses was reflected in low third-quarter catastrophe losses reported by insurers.

El Niño, which is characterized by warmer ocean water in the central and eastern Pacific, typically produces a seesaw effect with weaker hurricane activity in one ocean contrasting with stronger activity in another, Gerry Bell, College Park Maryland-based lead seasonal hurricane forecaster at the National Oceanic and Atmospheric Administration's Climate Prediction Center, said in NOAA's year-end report.

“El Niño intensified into a strong event during the summer,” he said.

This year, the Atlantic season, which usually poses the biggest threat to the U.S. coastline, was below average with four hurricanes — Danny, Fred, Joaquin and Kate — according to NOAA.

“There were 11 named storms. Four of those became hurricanes. Two of those four storms reached major hurricane status, which means they achieved a Category 3 or greater in the Saffir-Simpson scale,” said Peter Sousounis, Boston-based assistant vice president and director of meteorology at AIR Worldwide.

That level of activity was below a typical year, which would see about 11 named storms, with six reaching hurricane status and three becoming major hurricanes, he said.

On the other side of North America, where storms typically pose less of a threat to the U.S. coastline, activity increased.

With 11 major hurricanes, the Northeast Pacific broke its 1992 record of 10 major hurricanes in one year. Hurricane Patricia, which reached Category 5 status, hit part of Mexico's Pacific coast in October but quickly dissipated, causing limited insured losses.

“That's consistent with the fact that even though activity was below normal in the Atlantic ... it was busy overcompensating in the rest of the Northern Hampshire in terms of the Pacific Ocean, extending all the way to east central and western Pacific,” said Mr. Sousounis. “During El Niño, the activity can be considerably above normal because the warm water extends across much of the basin. This does two things: One, it increases the area where there is warm water, and that is conducive to the formation, but it also gives storms a longer opportunity as they are moving westward to intensify.”

As a result of the quiet U.S. hurricane season, property/casualty insurers and reinsurers reported limited natural catastrophe losses, said Christopher Grimes, a director at Fitch Ratings Inc. in Chicago.

“During the first nine months of this year, companies that did have some losses from winter storms and tornadoes earlier in the year benefitted from the lack of third-quarter losses. That's directly shown in the third-quarter results that were stronger than they have been in previous years,” where hurricane losses have been higher, said Mr. Grimes.

But even in the years before 2015, hurricane losses have been limited. According to a report by Colorado State University in Fort Collins, no major hurricanes have made U.S. landfall since 2005. Superstorm Sandy, which hit the Northeast in 2012, causing billions in insured losses, was below hurricane strength when it struck the U.S.

The catastrophe reinsurance market has seen rates fall significantly over the past several years but that is driven more by an influx of capital than by low losses, said Bryon Ehrhart, CEO of Aon Benfield Americas in Chicago.

“The inflows of capital have done more to change the dynamics of the reinsurance business than have losses in the last decade,” he said. “Anytime you have a doubling of the capacity without material growth in demand ... you're going to see a market that's quite favorable to clients.”