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Hurricane Polo strengthens, putting Mexico parametric cat bond at risk
The $175 million IBRD CAR Mexico 2024 (Pacific) parametric catastrophe bond is on watch as forecasts show Polo could pass near its offshore trigger box and breach the modelled trigger area.
Hurricane Polo has rapidly intensified off the southwestern coast of Mexico, with the storm now estimated at Category 4 sustained winds around 130 mph and the possibility of reaching Category 5 in the coming hours, Artemis reports.
Artemis says the strengthening is occurring over extremely warm Pacific waters and that forecast models mostly suggest Polo will not make immediate landfall. However, the storm’s path remains uncertain, with some model runs indicating a track that could bring it closer to the Mexican coast or toward the Baja peninsula.
That uncertainty has put the $175 million IBRD CAR Mexico 2024 (Pacific) parametric catastrophe bond into focus this week, Artemis adds. The bond’s parametric design is linked to a trigger box offshore that runs just off the coast, meaning any path wobble closer to shore could be enough to breach the trigger area.
Artemis also notes that forecasts show Polo potentially curving back toward the coast in some scenarios, with several model runs implying a risk of breaching the catastrophe bond’s parametric trigger box arrangement.