Analysis

Cat bond spreads proved to be largely unaffected by last year’s catastrophe activity as sponsors topped up ILS cover in a busy second quarter that nonetheless failed to outstrip 2017’s record volumes.

State-backed insurer Florida Citizens has borne the brunt of Irma losses, as other leading carriers in the state managed to keep their share of the event’s claims below their market share, Trading Risk analysis shows.

The average second quarter returns for a group of ILS funds tracked by Trading Risk has increased to 1.36 percent, compared with 0.79 percent for the same quarter last year.

ILS managers were offering larger line sizes and seeking to compete more often on reinstateable layers in the Florida June renewal, Willis Re observed in its mid-year 1st View report.

Recent developments in the sector have underscored the difficulties reinsurers are grappling with as they attempt to work ILS capital into their business model.

Is the industry ready to accept new attempts to create live trading platforms?

Private lapse deals are on the rise in the ILS market, driven by Solvency II regulations which require life insurers to hold onto more capital for lapse risk, according to life ILS managers.

Florida catastrophe reinsurance rates crept up by 1.2 percent on average at this year’s 1 June renewal, marking the first increase in seven years, according to JLT Re.