BMS Capital Advisory sole investment banker in Coverys’

New York, NY – BMS Capital Advisory (“BMS CA”) today announced it acted as sole investment banker to Coverys in its intended acquisition of R&Q Managing Agency Limited (“RQMA”), a fully authorized Lloyd’s third party managing agency. RQMA is part of Randall & Quilter Investment Holdings (R&Q), a non-life insurance investor, underwriting manager, captive manager and service provider.

The acquisition is subject to regulatory approval by Lloyd’s and the Prudential Regulation Authority.

Gregg Hanson, CEO and president of Coverys, said: “This acquisition shows our determination to further strengthen our client offerings, and we are delighted to have achieved this milestone with help of expert advice from our partners at BMS CA.”

Romulo Braga, CEO of BMS CA, said: “This transaction highlights the continued attractiveness of Lloyd’s to capital investors. Assisting Coverys in establishing its London market presence is a high-profile achievement for our advisory business, and we are therefore very pleased to be able to demonstrate our firm’s ability to deliver cross-border, integrated advice and institutional knowledge. ”

BMS Tropical Update 6/22/2017 12 PM CDT

Cindy made landfall around 4:00 a.m. CDT this morning near the Texas and Louisiana border as a weak tropical storm with maximum sustained winds of 40 mph. I have been scouring social media and NOAA local storm reports and have not seen any significant damage. The biggest impact has been flooding, as previously forecasted, but it appears at this time that a repeat of the August 2016 Louisiana flood is unlikely. The highest rainfall amount that I have seen so far is 8.5 inches in Wiggins, Mississippi. The Gulfport-Biloxi Airport in Mississippi picked up 8.43 inches, and in Florida, the 8.25 inches in Navarre is the top total that I have seen. It should again be noted that these locations are over 300 miles from where Cindy made landfall. The BMS iVision Verisk Climate total rainfall layer suggests that some isolated coastal areas have seen upwards of 6 – 9” of rain over since Monday.

BMS iVision Verisk Climate total rainfall layer for Cindy up until 1 AM EDT 6/22/2017. BMS clients can run exposure reports against these rainfall amounts.

A surprising fact for some may be the level of storm surge that has occurred along parts of the central Gulf Coast. The largest storm surge level that I have been able to find was reported in Shell Beach, AL with an observed storm surge of 6 feet above the Mean Higher High Water (MHHW). This location is roughly 250 miles from the center, suggesting that Cindy had a large circulation which allowed a lot of water to pile up along parts of the central Gulf Coast over the last several days.

Observed Water Level At Shell Beach, LA

Example of road closures and flooding in Mobile Bay, AL that is currently common along coastal areas of the central Gulf Coast.

As mentioned, the winds from Cindy have been in the 45 – 55 mph range, which is well below the international residential design minimum of 90 mph. With only a handful of damage reports in to the NOAA, all of which are reports of trees or power lines being knocked down, the wind damage should be fairly minimal.

iVision Verisk Climate maximum gust in mph. BMS cleints can run exposure reports to understand the risk to high wind speeds from Tropical Storm Cindy.

At this time PCS has not issued a catastrophe bulletin, suggesting that the insurance industry loss could remain under $25 million.

Looking ahead over the longer term, the tropics should remain quiet for the next two weeks as the active phase of the Madden Julian Oscillation moves away from the Atlantic basin and other climate forcers such as the SAL layer and high wind shear hinder tropical development.

BMS Tropical Update 6/21/2017 12 PM CDT

Just after the tropical update yesterday, the National Hurricane Center (NHC) proceeded to upgrade Potential Tropical Cyclone Three to Tropical Storm Cindy. Currently Cindy is located 170 miles SSW of Morgan City, LA and may be the ugliest organized named storm that meteorologists have seen in the Gulf of Mexico in quite some time. It’s even questionable if it meets the true definition of a named tropical storm. In their 4 a.m. tropical discussion, even the NHC suggests that the cyclone is more characteristic of a subtropical cyclone and that the current categorization is generous.

Cindy is still expected to make landfall late tonight near the Texas/Louisiana border as a tropical storm. This landfall location is no stranger to named tropical storms, with 25 other tropical storms having tracked within 55 miles of the expected landfall location, based on historical records. However, as highlighted in the past few updates, the majority of insured impacts are being felt far away from the center of Cindy across eastern Louisiana and the panhandle of Florida. Heavy rainfall and flooding still appear to be the main threats across these areas. The BMS iVision Verisk Climate total rainfall layer suggests that isolated coastal areas have seen upwards of 4 – 6” of rain over the last 24 hours.

BMS iVision Verisk Climate total rainfall layer. BMS Clients can run exposure reports against these rainfall amounts.

New Orleans recorded record rainfall yesterday of 1.62” and more is expected today as an atmospheric river of moisture is pulled north from the deep tropics over the same area, creating a storm total that may be close to 14” in some areas.


Although there have been many tornado warnings issued over the last 24 hours for the central Gulf Coast, only 2 confirmed tornados, both weak with minimal damage, have been reported. As of this morning, no wind damage reports have been logged with the National Weather Service.

Based on the iVision Verisk Climate maximum gust data layer, most coastal areas will only experience winds of 40 – 69 mph, which in most cases is below the damage threshold for many structures.

iVision Verisk Climate maximum gust in mph. BMS cleints can run exposure reports to understand the risk to high wind speeds from Tropical Storm Cindy

As history would suggest, it is difficult to estimate insured losses from weak tropical storms. Let’s look at three historical tropical storms (Chris 1982, Debra 1978, TS#2 1987) that took a similar track inland as to what Cindy is forecasted to take. The insured losses from these storms range from $2 million to $12 million. However, given the large threat of flooding from Cindy, it should be noted that the major Louisiana flood event that occurred from August 11, 2016 to August 15, 2016 reached $1 billion in insured losses.  Estimating insured losses of tropical storms can be difficult.

As expected, Tropical Storm Bret has dissipated in the southern Caribbean. Looking ahead over the longer term, the tropics should remain quiet for the next two weeks as the active phase of the Madden Julian Oscillation moves away from the Atlantic basin and other climate forcers such as the SAL layer and high wind shear hinder tropical development.

BMS Tropical Update 6/20/2017 12 PM CDT

Update:  12:39 PM CDT  the NHC will be upgrading PTC3 to Cindy.  The most recent ECMWF 12z landfalls TS Cindy into Houston.  Has some strong winds with a landfall pressure of 990 mb which is a minor hurricane pressure.

 

Yesterday afternoon the National Hurricane Center (NHC) found enough evidence from the Air Force reserve hurricane hunter aircraft to upgrade Potential Tropical Cyclone Two to the second named storm of the 2017 Atlantic hurricane season. As mentioned in yesterday’s post, Bret still does not pose a significant threat to the insurance industry and will likely weaken later this week as it transverses the South American coastline in the southern Caribbean Sea.
The bigger threat to the insurance industry remains Invest 93L which, as of yesterday afternoon, was labeled Potential Tropical Cyclone Three (PTC3). Again, the idea of issuing advisories before a tropical depression or named storm forms is to highlight the threats of a developing storm earlier in its life cycle, and PTC3 is a classic example of the reason why there has been a change in policy. In fact, tropical storm warnings and watches are now in place along the Gulf Coast as PTC3 is still expected to develop into the next named storm (Cindy) before its low center makes landfall near High Island, Texas, in the late evening hours Wednesday, but tropical storm force winds could occur as early as before sunrise  on Wednesday.

This morning, it appears that PTC3 is gradually becoming better organized as it approaches the southern Gulf Coast. There is still a great deal of wind shear impacting the convection on the western side of the low center, which is likely the primary reason that the NHC has not yet upgraded PTC3 to a tropical depression or named storm.

 

This is the GFS model depiction of winds shear impacting the west side of PTC3

Forecast models still expect gradual strengthening of PTC3 until the low center moves inland later tomorrow afternoon. Historically, developing storms in the Gulf of Mexico are notorious for rapidly straightening towards the coast, but given the broad circulation along with the large radius of maximum winds, this becomes more difficult with PTC3. Regardless of how strong PTC3 becomes over the next 36 hours, given the nature of the circulation, the wind and rain hazards extend well north and east of the center which makes PTC3 a great example of the far reaching impacts a tropical storm can have away from the main track. In this case, the NHC cone is far outside of where the very heavy rains are forecasted for the Mississippi and Alabama coastlines.

NOAA QPF forecast suggesting over 10″ of rain far away from the NHC track of the low center. Heavy rainfall will be from Houston, TX to Pensacola FL

It is this rainfall which will continue to likely be the largest loss for the insurance industry, and the rainfall is already starting to reach the coastline. This rainfall will come from training of individual thunderstorms which are already creating areas of severe weather across the Gulf Coast States. Tornado warnings are being issued and individual thunderstorms are producing localized severe weather along the Gulf Coast which could also cause insured loss far outside the  forecated path. As indicated above, the NOAA Weather Prediction Center is now forecasting for as much as 10” of rain to fall over southern Mississippi and Louisiana, with as much as 7” over eastern Texas.  There could be locally even higher amounts.

Making things worse is the soil moisture is already saturated from the recent heavy rainfall that has occurred over the last 30 days. Therefore, most of the rain that falls will run off and exacerbate the flooding threat. This saturated soil could increase tree fall from higher winds as wet soil weakens the hold on a tree’s root system.

Given the broad and large circulation, storm surge risk is higher than what it might typically be with a developing named storm. Currently, it appears that inundation levels in the tropical storm warning area could be as high as 3 feet along the coastline.

BMS Tropical Update 6/19/2017 12 PM CDT

As expected from last week, two areas of tropical trouble are trying to form in the Atlantic Basin. If both of these tropical systems manage to get named this week, it would be fairly rare as only three Atlantic hurricane seasons on record have had two concurrent named storms in June. Those years were 1909, 1959 and 1968, all of which turned out to be average to slightly above average hurricane seasons with a higher than average landfall rate across the U.S. This is in line with the general thinking of what could occur this Atlantic hurricane season.

Since last week, the National Hurricane Center  (NHC) has been watching these two disturbances. One of these has been centered north of the Yucatan Peninsula and has been labeled Invest 93L. The other disturbance is labeled Invest 92L and is currently located 325 miles ESE of Trinidad, moving rapidly toward the southern Windward Islands. In fact, for the first time ever for a tropical system, the NHC has begun issuing advisories for 92L before it is a depression or named storm and has also labeled the system “Potential Tropical Cyclone Two.” I talked about this possibility in my New Hurricane Products for 2017 Season blog post. The NHC is doing this because there is an immediate threat of tropical storm force winds to land, which, in this case, would be in the southern Windward Islands where the watches and warnings are in effect.

What is the forecast and worry for insurance industry this week?
“Potential Tropical Cyclone Two”
Potential Tropical Cyclone Two has a 90% chance of tropical development over the next two days. Early visible satellite imagery suggests the system is still an open wave and does not have a closed center of circulation, which is part of the criteria for storm naming by the NHC. My guess is that the NHC will wait to name the storm (Bret is the next storm name) until this afternoon when an Air Force reserve hurricane hunter aircraft is scheduled to investigate the potential tropical cyclone. Depending on what the aircraft finds, it could get a name. Regardless of whether the potential tropical cyclone gets a name, stormy conditions will be experienced in the southern Windward Islands. The forecast models are suggesting that after today the system will struggle to maintain itself as interaction with South America and increased wind shear will likely hamper any development in the second half of this week. This means the overall impact to the U.S. insurance industry is minimal at this time, and even if named, it would be a short lived tropical system.

Last Night ECMWF Ensemble Breakdown of disturbance two tracks and intensity

Invest 93L
Invest 93L also has a high chance of tropical development over the next two days with an 80% chance of development. The reason why the NHC has not issued advisories for this system is they currently feel the threat of tropical storm conditions is less severe and it could take a few days to produce strong winds over land. So overall, the difference between these two systems in terms of advisories is the immediate threat of tropical storm conditions to land is greater for Potential Tropical Cyclone Two. However, in the longer term Invest 93L has the higher likelihood to impact the insurance industry. This morning’s satellite imagery suggests that the low level center is decoupled from the deep tropical convection on the right (east) side of the storm.

Visible Satellite shows low level center is decoupled from the deep tropical convection on the right (east) side of the storm.

There is a chance it’ll never actually develop into a tropical cyclone as the wind shear over the next few days could hamper development.

ECMWF forecasted strong southwesterly wind shear associated with a trough aloft blowing t-storms away from surface center of Invest 93L inhibiting development. Also shown is the shear that could impact disturbance two.

However, later in the week this wind shear is likely to abate and formation of a named storm becomes more likely.

As always there is uncertainty in the development and final track of tropical systems. The GFS (American model) takes this system on a more northerly track towards Louisiana and even on some early weekend runs into the Florida panhandle. However, as I highlighted in my New Hurricane Products for 2017 Season blog post, the new GFS model this year is not the model to watch. The more reliable ECMWF (European model) takes 93L into southern Texas as indicated last week, so the model has been fairly consistent with the ideas Texas will see worse of the impacts in terms of tropical storm force winds if they develop.

At this time, almost all forecast models for 93L remain below hurricane strength. Regardless, deep tropical moisture will have far reaching effects along the Gulf Coast states, so heavy rainfall and flooding are currently the biggest threats to the insurance industry to areas that don’t handle a lot of rain well like New Orleans and Houston. Depending on the track,  5 inches of rain could easily fall as a sort of atmospheric river seems to be setting up along the Central Gulf Coast.

NOAA Weather Prediction Center showing much of the central gulf coast is expected to get 2 – 5″ of rain which is conservative in my opinion based on the sort of atmospheric river that seems to be setting up into the Central Gulf Coast with a possible poorly organized tropical disturbance.

 

 

BMS Group partners with The Brain Tumour Charity

We are pleased to announce that we are supporting The Brain Tumour Charity throughout 2017 and 2018.

As well as organising a host of fundraising events and initiatives, we have deployed a team of intrepid colleagues to take on the Everest in the Alps challenge in February 2018 – an incredible test of stamina, both physically and mentally.

Nick Cook, CEO of BMS Group said: “We decided to work with The Brain Tumour Charity as for many of us at BMS, it is a subject that is close to our hearts. With 30 people in the UK diagnosed with a brain tumour every day, the statistics are truly astonishing. We are delighted to support such an important cause and look forward to helping increase the profile of this great charity and raise as much money as possible”.

Geraldine Pipping, Director of Fundraiser at The Brain Tumour Charity said: “Despite brain tumours being the biggest cancer killer of children and adults under 40, survival rates have improved very little over the last 40 years.

We receive no government funding, so we rely 100 per cent on fundraising, donations and gifts in wills. It’s only through the efforts of people and companies like BMS, that we can change those shocking statistics and bring hope to the 10,600 people who are diagnosed with a brain tumour each year”.

Support us
Visit our JustGiving page to see our latest fundraisers and make a donation. Thanks for your support.

About The Brain Tumour Charity
The Brain Tumour Charity is at the forefront of the fight to defeat brain tumours, making a difference every day to the lives of people with a brain tumour and their families. It funds pioneering research to increase survival, raise awareness of the symptoms and effects of brain tumours and provide support for everyone affected to improve quality of life. Click here to find out more.

New Hurricane Products for 2017 Season

Every year there are new tools and products that can help the insurance industry understand named storm risks.  In this write-up, I highlight some of these new tools and products for the 2017 hurricane season, which starts today.   For ideas on the type of activity that is expected this season please see my previous update here:  May Tropical Update issued May 15th.

Advisories Will Be Issued Before a Storm Is Named

The National Hurricane Center (NHC), which decides when a named storm gets a name, will issue advisories for tropical systems before the tropical system has a name. In these cases, these tropical systems will pose a threat of bringing tropical storm-force or hurricane-force winds to land areas within 48 hours. For decades these tropical disturbances have been called ‘Invests’, or areas of investigation, and for the last few years the NHC has been giving Invests forecasts related to the chance of formation within the next five days.

Currently some re/insurance contract language is directly related to named storm activity. However, the advisories for these tropical systems that will likely impact land could now lead to earlier activity in re/insurance contracts where coverage is triggered by storm warnings or watches, as the NHC would previously wait for a storm to be named before issuing such warnings or watches. In most cases, these types of named systems would be in a developing stage just off the U.S. coastline and would highlight not only the likelihood of genesis of a named storm, but the possible strength of winds along the coastline.

Hurricane Humberto in 2007 is a classic example of where the NHC would have likely issued watches and warnings before Humberto was named if it took place in 2017. Humberto strengthened into a hurricane in a 24 hour period. Source: AccuWeather Inc. & NOAA

Storm Surge Watches and Warnings Are Coming 

For the last several years, the NHC has made large improvements to storm surge forecasts from named storms.  In fact, the detailed Potential Storm Surge Flooding Maps now rival the high resolution flood model simulations that are becoming common in the insurance industry by various Cat Modeling vendors.  However, another tool that might help the insurance industry is that the NHC plans to release storm surge watch and warning graphics to provide further guidance on where the greatest threat to life and property from a named storm might be.   The insurance industry is all too familiar with the hazards and damaging storm surge that occur with a threatening named storm and this guidance can help pin point areas likely to be most impacted by storm surge.

New storm surge watch and warning product for 2017 hurricane season. Source: NHC

Earliest Reasonable Arrival of Tropical Storm-Force Winds Will Be Forecast

The NHC has always provided guidance as to the position and timing of the center of a named storm; however, to provide more added value, the NHC will now be directly forecasting when tropical storm-force winds will begin to affect land. This will allow the insurance industry to better understand when winds greater than 39 mph are expected, which should aid in allowing more time for an insured to apply preventative measures to mitigate risk from damaging storms. Above 39 mph, winds can make it difficult and even dangerous to be outside continuing preparations for a tropical storm or hurricane.

The IBHS has some helpful hints to reduce hurricane damage to homes and businesses.


The Cone of Uncertainty Will Be Smaller

Every year the NHC reviews the accuracy of their previous five seasons of hurricane forecasts.  This review suggests the forecasts are getting better, and with that, the average error in the NHC forecasts that make up that famous cone of uncertainty will result in a smaller cone and just maybe more certain hurricane forecasts for the 2017 season.  Track errors have gone down over the last 10 years and forecasts have gotten better.  In fact, since 2007, the size of the cone of uncertainty at 120 hours (or five days) has shrunk by more than 35%.  Since last year, the size of the cone at 120 hours has shrunk by more than 10%.

The shrinking cone of uncertainty. Source Brian McNoldy Univ. of Miami

Hurricane Model Wars

As long as I have been studying meteorology there have been wars among the various forecast models as to which model is the most accurate at forecasting named storm activity.  This war was brought into the public limelight after Hurricane Sandy in 2012, when the American Model [Global Forecast System (GFS)] falsely forecasted Sandy to track offshore, and the European ECMWF model correctly predicted Sandy to make landfall in New Jersey.  Just like the various hurricane products described above, the weather models themselves are under ongoing improvements.  One item to watch this hurricane season is the upgrade to the GFS model on July 12th.  As part of these upgrades, the NOAA asks forecasting divisions like the NHC to run performance tests.   Although the tests might suggest better temperature forecasts or precipitation forecasts for different areas of the globe, one area where the upgraded GFS shows deficient skill is with hurricane forecasting.   The report I have seen from the NHC suggests for the 2014-2016 retrospective runs, in comparison to the 2016 GFS model, the 2017 GFS showed a 9-10% degradation in track forecast skill at 48-72h in the Atlantic Basin.  In terms of intensity forecasting, the 2017 GFS showed degradations in intensity forecast skill at nearly every forecast interval out to 120 hours in the Atlantic Basin.  The new GFS model also indicated less run-to-run consistency.  It likewise showed little overall improvements in TC genesis forecasts for the Atlantic Basin.

Evaluation of the proposed 2017 GFS implementation done by the NHC in February 2017

Another troubling factor is that the GFS model will likely have other fallouts with the regional models, such as the HWRF and GFDL, and the statistical models such as the GFEX.

Here is the quote from the NHC about the upgrade to the GFS model:

“The loss of short- to medium-range TC track and intensity forecast skill for the Atlantic basin in the proposed 2017 GFS is unacceptable to the National Hurricane Center.  We are also concerned about the lack of testing of the downstream impact of the 2017 GFS on the regional hurricane models.  Therefore, we oppose this implementation.”

As the insurance industry watches all of the various hurricane forecast model runs to determine where a hurricane might track, it might be good to put a bit more weight in the ECMWF model this season.  However, the ECMWF will also be upgraded on July 11th and very few people know what these upgrades will do to its hurricane forecasting.

Detail of this model upgrade can be found here:

http://www.emc.ncep.noaa.gov/gmb/noor/GFS2017/GFS2017.htm