Analysis

ILS capacity in the form of retained earnings and new inflows is shaping up to meet growing demand for reinsurance and retro coverage.

The broker studied the impact of 14 major cyber events in its attempt to dispel ILS manager fears of a ‘double whammy’ cyber event that would also impact financial markets.

The supply-demand dynamics are all pointing in ILS markets’ favour, so long as hurricane season goes quietly.

The ratings agency has said ILS firms could encounter “pent-up demand” from cedants during the January 2024 renewal.

Hurricane Idalia is still live, but the storm’s track reassured market participants that it will be a relatively minor loss.

If the assets of the cell form part of the Vesttoo estate, this may impact the priority of returning associated capital to cedants.

Total reinsurance capital will climb to $560bn, ahead of last year but behind the 2021 peak of $570bn.

The industry’s ability to draw new capital will hinge on the outcome of the Atlantic hurricane season.

Loss estimates from Aon, Gallagher Re, Swiss Re and Munich Re all point to a significant component of severe convective storm losses.

Most forecasters now predict above-average storm activity for the Atlantic as a result of record-high sea-surface temperatures.

At least six aggregate bonds offering convective storm cover have been marked down by around an average of more than 20% on the secondary market.

Risers and fallers emerge within peer group of larger ILS firms, with Twelve Capital and Pillar the fastest growing in H1.

Insurance Insider has gathered data on geographical areas prone to cat events, which are outside of southeastern US states, that keep weather experts awake at night.

The company’s targeted Vescor cat bond would have provided collateral to meet auto and other obligations, but there were multiple structural points of risk for investors.

Fronting companies typically hold premiums in reserve meaning that credit exposure to letters of credit on Vesttoo transactions should only be required in the event of deteriorating losses.

Some sources have called for more transparency on secondary trades, though others note the buy-and-hold nature of the market limits trading appetite.

The cat bond market has benefited from hardening rates and more remote structures.

ILW limit of around $1bn could change hands depending on where the Hurricane Ian industry loss number settles.

At this week's Bermuda Climate Summit, speakers heralded the Island's future as a centre of excellence for climate-related innovation and risk transfer.

Cat bond issuance in H1 at around $8.6bn was almost a match for full-year 2022 volumes at $8.9bn, as the market staged a recovery at a pace that surprised many participants after a challenging second half last year.

Compelling rates are on offer for markets willing to write wildfire risk in the sunshine state.

A Guy Carpenter report recently noted that risk models are converging for the most remote risk levels.

The life segment has shifted from its genesis in mortality and morbidity risk transfer as lapsed risk deals have proliferated.

Most forecasters predict below-average activity in the region – but opposing weather phenomena mean uncertainty is higher than usual.