As per Solidum Partners, the onset of an El Niño pattern does not translate into a straightforward rule of thumb for ILS managers and their clients. While a less active hurricane season typically implies downward pressure on nominal spreads, the firm highlights that a broader array of market forces, including capital supply-demand dynamics and total reinsurance capacity, will continue to influence market direction.
In a new report released by the Swiss insurance-linked securities investment manager, which specifically examines how the 2026 Atlantic hurricane season coincides with the ILS market, Solidum outlines that while El Niño is a critical factor, it is only one of the many factors that are important for such a forecast.
“A wide range of information is taken into account when forecasting the course of a hurricane season. In addition to the ENSO regime, the ocean heat content and sea surface temperature in a specific region are particularly significant in the medium term. Shorter-term factors include the position of the Bermuda/Azores High and the phase of the Madden-Julian Oscillation during the peak of the season,” Solidum writes.
FULL ORIGINAL PUBLICATION HERE