RW: They keep dodging bullets, but this chart may explain why storms keep cropping up. Stay short P&C. Does this enhance winter storms and nor easters as well?
Gallagher Re’s October 21 report estimates first-nine-month 2026 catastrophe losses at:
- $242 billion economic
- $92 billion insured, including private and public insurance
- $150 billion protection gap, by subtraction—about 62% of economic losses
- Economic losses were 33% below the ten-year average; insured losses were 29% below average and the lowest nine-month total since 2019. GallagherRe
ChatGPT: Yes—unusually warm tropical Pacific waters can contribute to stronger winter storms and nor’easters. But there’s an important distinction: warm water supplies energy and moisture; atmospheric circulation determines where that energy goes.
And your chart is striking.
The red 2026 line shows Niño 3.4 sea-surface temperatures around 30.1°C in late October, compared with a historical seasonal average near 26.5°C. That’s an extraordinary absolute-temperature difference, roughly 3.5°C.
However, we should verify the underlying dataset before treating that difference as an official El Niño anomaly. The chart uses daily sea-surface temperatures, whereas NOAA’s ENSO classification relies on anomalies relative to an appropriate climatology, typically averaged over longer periods.
How this could affect winter storms
|
Winter hazard |
Effect of unusually warm tropical Pacific waters |
|---|---|
|
Nor’easters |
Potentially stronger moisture supply and more energetic storm development |
|
Heavy Northeast snow |
More precipitation potential, but only if sufficiently cold air is present |
|
Coastal flooding |
Potential for stronger coastal storms and heavier precipitation |
|
Ice storms |
Possible where warm, moist air overruns shallow surface cold air |
|
Atmospheric rivers |
Potentially wetter storms, depending on Pacific circulation patterns |
|
Polar outbreaks |
No reliable direct increase; blocking and polar circulation matter more |
The key for your insurance thesis is that the same environment can increase precipitation extremes without increasing snowfall everywhere. In marginal coastal locations, additional warmth may turn what would have been a major snowstorm into heavy rain and flooding.
The official forecasts confirm this is an exceptional El Niño
The independent evidence is even more compelling than the chart alone:
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October 14 weekly Niño 3.4 anomaly: approximately +3.3°C, according to Columbia University’s International Research Institute.
October 2026 Quick Look -
NOAA’s October 8 outlook: more than an 83% probability of a strong-to-very-strong El Niño persisting through January–March 2027.
Climate Prediction Center -
World Meteorological Organization: forecasts an October–December anomaly around +3.7°C, potentially exceeding the previous record. That’s a forecast, not an observed seasonal record yet.
World Meteorological Organization
Most importantly, NOAA’s October 15 winter outlook favors wetter conditions across the southern United States and Eastern Seaboard, with a southward and eastward shift in the jet stream.
What it means for your P&C shorts
I would add a 2026–27 El Niño winter-storm accumulation test to the Sicario framework, with three particular exposures:
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Northeast coastal insurers: Nor’easter wind, roof damage, coastal flooding and repeated storm claims.
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Southeastern insurers: Winter severe thunderstorms, tornadoes, hail and flooding. Florida can experience increased winter severe-weather risk during El Niño.
National Weather Service -
National commercial insurers and reinsurers: Multiple geographically separated events creating aggregate losses, earnings volatility and possible reinstatement costs.
The USGS specifically identifies increased odds of coastal storms and nor’easters during this winter’s strong El Niño, while emphasizing that snowfall remains uncertain.
Does this justify staying short P&C? It strengthens the weather-risk component of your thesis, particularly if valuations already assume unusually favorable catastrophe experience. But it doesn’t by itself establish that the shorts are attractive: pricing adequacy, geographic exposure, reinsurance attachment points, retained losses and investment income still matter.
There is also a counterweight: El Niño generally suppresses Atlantic hurricane activity through increased wind shear, even while favoring more eastern Pacific storms.
The interesting possibility is that insurers escape a major autumn hurricane only to face repeated winter coastal storms, Southern severe weather and flooding, with a portion of those losses retained below catastrophe-treaty attachment points.
That is precisely the sort of accumulation risk that can erode earnings without ever producing a single spectacular headline catastrophe.
The distinction is between tropical disturbances and organized hurricanes.
Warm Caribbean water provides enormous potential energy. But a powerful El Niño tends to strengthen upper-level westerly winds across the Caribbean, increasing vertical wind shear. That can tear apart developing storms before they establish a sustained circulation.
We saw that mechanism earlier this season with Tropical Storm Dolly, which rapidly degenerated into an open tropical wave under hostile atmospheric conditions.
Why late-season Caribbean storms still concern me
The western Caribbean is particularly important in October and November. Storms can develop relatively close to land, leaving less time for preparation, and steering patterns can carry them toward Cuba, the Yucatán, Florida or the Gulf Coast.
Three factors would make me more concerned about the disturbances you’re seeing:
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A relaxation in wind shear, allowing thunderstorms to remain organized around a low-pressure center.
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A persistent Central American gyre or monsoon trough, providing broad rotation and repeated opportunities for development.
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A favorable Madden–Julian Oscillation phase, temporarily increasing tropical convection despite El Niño.
A disturbance can also produce destructive flooding in Jamaica, Hispaniola or Central America without ever becoming a hurricane.
Implications for your P&C shorts
For UVE, HCI, HRTG and SLDE, a late-season Florida or Gulf hurricane would be considerably more consequential than additional storms remaining over the open Atlantic.
The particularly interesting scenario is a storm forming close to the Yucatán, moving into the eastern Gulf and intensifying quickly over exceptionally warm water. That is a plausible scenario, not a forecast.
I checked for current October 24 reporting, but the results did not establish a verified new Caribbean invest or an official NHC formation probability. I therefore wouldn’t elevate any particular disturbance to an alert yet.
My assessment: El Niño reduces the overall Atlantic hurricane threat, but it does not eliminate the possibility of one damaging late-season hurricane. For your insurance thesis, one Florida landfall could matter far more than the total number of storms this season.
I’ll keep the western Caribbean, Cuba, the Yucatán Channel and eastern Gulf as the priority areas in the tropical watch.
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