Irma heads toward Florida with huge insured-loss predictions

(Bloomberg) -- Irma barreled toward Florida after battering Puerto Rico and devastating a chain of small Caribbean islands, as the Category 5 hurricane threatens to turn into the most expensive storm in U.S. history.

Irma, one of three hurricanes churning toward North America, is forecast to hit Florida by Sunday afternoon, a prospect that has roiled markets for everything from orange juice to insurance and natural gas. A mandatory evacuation order has been issued for some areas including downtown Miami and Miami Beach. Barclays Plc has estimated insured losses in a worst-case scenario from the storm at $130 billion.

“The threat of direct hurricane impacts in Florida over the weekend and early next week continues to increase,” the U.S. National Hurricane Center said in an advisory. The center of the storm will approach the Turks and Caicos and southeastern Bahamas Thursday evening bringing “life-threatening” storm surges and “large and destructive waves.”

users_iqjWHBFdfxIU_iXOU6BoNbzq0_v0_pi0TFsqn_N8siPbzgcJYQlLw_-1x-1.jpg
Residents wait in line outside of a Home Depot Inc. store ahead of Hurricane Irma in Miami, Florida, U.S. Photographer: Jayme Gershen/Bloomberg

Hurricane Jose was just behind Irma in the Atlantic, also forecast to move north of Puerto Rico. In the Gulf of Mexico a third hurricane, Katia, threatened to come ashore in Mexico.

Hurricane watches will probably issued for parts of the Florida Keys and the Florida peninsula later Thursday, the NHC said. Reinsurance companies could take a big hit as primary insurers have reduced exposure to Florida in recent years, analysts say. Volatility in stocks across the sector will probably continue until the storm’s path and damage become more certain.

The system may knock out power to almost 2 million people, curb natural gas demand in one of the largest U.S. markets and threaten $1.2 billion worth of crops in Florida -- the top U.S. grower of fresh tomatoes, oranges, green beans, cucumbers, squash and sugarcane.

The storm damaged or destroyed as much as 95 percent of homes on the small island of Barbuda, crippled its airport runway and broke a cellular tower in two, complicating relief efforts, Prime Minister Gaston Browne said on national television. “It is absolutely heart-wrenching.”

“Anguilla received the hurricane’s full blast” and the British Virgin Islands were also affected, U.K. Foreign Office Minister Alan Duncan told parliament on Thursday. “Our initial assessment is of severe damage and we expect that the islands will need extensive humanitarian assistance, which we will of course provide.”

There was massive damage on the two French West Indies islands killing eight people, French Interior Minister Gerard Collomb said at a press conference in Paris Thursday. The total death toll has risen to 10, according to the Associated Press.

Mandatory Evacuations

In the U.S., mandatory evacuations were issued for the Florida Keys and Governor Rick Scott said he expected additional evacuation orders. President Donald Trump said in a Twitter post on Wednesday that he is “watching hurricane closely” and his team is already in the state. In addition to Miami-Dade’s mandatory evacuations, Broward and Collier counties issued voluntary evacuation orders for some areas.

Irma comes less than two weeks after Hurricane Harvey smashed ashore in Texas, knocking offline almost a quarter of U.S. oil refining capacity and causing widespread power outages and flooding. Current models show Irma veering away from gas and oil platforms off the coast of Texas and Louisiana, sparing Houston more devastation.

Irma’s top winds weakened slightly to 180 miles (290 kilometers) an hour from 185 miles an hour previously, but the storm remained Category 5 strength, the highest measure on the five-step Saffir Simpson scale. It was about 165 miles southeast of Grand Turk Island as of about 8 a.m. New York time, according to the NHC.

A direct strike on Miami at Category 4 strength could lead to insured losses of $125 billion to $130 billion, Jay Gelb, an analyst at Barclays, wrote in a note Tuesday. Uninsured losses would add to that. Losses from Katrina, both insured and uninsured, reached $160 billion in 2017 dollars after it slammed into New Orleans in 2005.

Only three Category 5 hurricanes have hit the contiguous 48 U.S. states, according to Weather Underground: the Labor Day Hurricane of 1935 that devastated the Florida Keys, Hurricane Camille in 1969 and Hurricane Andrew that cut across Florida in 1992.

In other storm news:
Orange juice futures traded near their highest level since May. U.S. airlines capped ticket prices for passengers fleeing the hurricane and hotels across the Caribbean shut. More than 1,800 flights have been canceled due to the storm, according to FlightAware. Insurers including Progressive Corp. and Allstate Corp. stopped issuing policies on new cars in some Florida counties. The storm is posing an unprecedented threat to the catastrophe-bond market. Norwegian Cruise Line Holdings Ltd. gave passengers on the Norwegian Escape a choice to get off the ship in Miami or stay on board and sail away from the storm.