Insight and Intelligence on (Re)insurance Convergence with the Capital Markets

4 February 2012

Cat fund sellers become buyers

18 June 2010

Dedicated cat funds - usually considered protection sellers of industry loss warranty (ILW) and cat derivatives contracts - have become buyers of cover in an effort to hedge heavy US wind exposures and potential Deepwater Horizon losses.
The subsequent demand-supply imbalance has resulted in a price increase of up to 25 percent for certain US wind ILW contracts, according to Aon Benfield data.
More than 95 percent of the $1.45bn new ILS issuance this year covers US wind exposures. Coupled...

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