-
Managers have tightened buffer terms and added extension spreads to enhance illiquid strategies.
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Retained earnings resulting from reduced loss activity also helped to boost ILS capital.
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Reinsurers have a "strong desire" for growth, but not at the expense of underwriting.
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The broker said 1 April Japanese renewals reinforced positive trends in the US at 1 January.
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Drop-in capital has now largely left the cat bond market.
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Some $415mn of capacity entered the market last year.
-
Exposure updates played a greater role than expected.
-
The outlook for M&A activity is brighter after 2023 returns.
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The carrier is designing an investable portfolio of long-tail risk.
-
Sponsors still secured terms that were favourable relative to traditional cover.
-
Aside from the one-year view, 2023 remixes the track record.
-
The conflict between US and Bermuda legal systems offers no easy route for counterparties to fraud-impacted transactions.
-
Of the 18 top-tier ILS managers, 10 recorded growth, while eight were flat or down.
-
Typical ILW attachment points for US peak perils have fallen from $60bn to $40bn-$50bn as the market awaits the final Hurricane Ian number from PCS.
-
The sidecars segment has been attracting inflows after returns hit a high note in 2023.
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Broker-dealers' year-ahead forecasts have undershot total final issuance in three of the last five years.
-
Reinsurers are making some adjustments to secure target signings but appetite to grow is finely balanced.
-
Projected 2024 ILS returns remain historically high, but signs of increased appetite for top-layer cat risk and top-end retro raise questions over how long this will last.
-
New and returning sponsors, diversifying European wind risks and early placement of US hurricane coverage all helped new issuance to smash market expectations.
-
Anticipations of a tug-of-war around a ‘flat to slightly up’ pricing renewal have indeed come to fruition.
-
The year brought a degree of closure on the loss-hit years of 2017-2021, while the outlook remains changeable for ILS managers.
-
ILS managers are still waiting for hard market growth.
-
Analysis by Lane Financial concluded that ILS returns will likely be double-digit-to-high-teens in 2024.
-
With more ILS managers chasing the popular bond space, how will new operators differentiate themselves?
-
A strong outlook for sidecar profits in 2023 is rebuilding investor confidence but one to three years of good performance will be needed to sustain it more fully.
-
Experts at the Trading Risk New York conference emphasised in-built cyber risk protections from defences to exclusions, as ILS managers grapple with understanding the peril.
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Cat bond investors are sufficiently capitalised to fulfil demand from an anticipated strong pipeline of new issuance in Q4.
-
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.
-
Even clean accounts in the admitted space are seeing rate increases of 15% year on year, while loss-hit accounts in Florida were slapped with a 100% rate increase for June 1.
-
Early private deals have provided far more stability in this year’s renewal than last.
-
Shifts in reinsurance appetite across the risk spectrum has squeezed out ILS providers in some cases.
-
Softening cat bond rates are among the bearish signals for cat rates, but latent new demand and still-cautious supply should prolong reinsurer gains.
-
Five counterparties account for almost half of all premiums ceded by a sample of major Floridian carriers, analysis shows.
-
The pace of rate hikes will ease back from the 1 January reset as buyers seek to lock up capacity early after last year’s dislocated renewal.
-
UBS previously explored setting up an ILS offering, but instead opted to offer other firms’ products.
-
The asset class is finding favour particularly with allocators that have been watching returns play out over the long-term horizon.
-
A trend for slightly riskier bonds has brought with it a rise in the absolute margin on offer.
-
The cat bond market is thought likely to receive an outsized portion of any capital inflows.
-
Beazley executives spoke of further growth prospects in the class, after its results revealed a 79% combined ratio for its cyber division in 2022.
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A canvass of Lloyd’s market executives generated an expected combined ratio of 92%-93% for 2022.
-
Reinsurer-owned ILS platforms were challenged to grow fee income in a tough year for nat cat losses and as cat market economics shifted.
-
The reinsurer said in its Q4 earnings call that Argo’s takeover further diversifies its operations and adds a foundational piece to its expanding P&C activity in the US.
-
The two top-performing funds in 2022 were interval funds.
-
Following rate increases at 1 January, projected fund returns for 2023 are up several points year on year, with a boost also from higher Treasury rates.
-
Early evidence is leading the (re)insurance market to hope the storm can avoid the development curve of its 2017 predecessor Hurricane Irma.
-
The headline market drop in AuM belies a more lively growth story for funds operating outside of the ILS major league.
-
Beazley’s bond was hailed as a “great first step” but challenges remain, although others are already working on narrower cloud outage transactions.
-
The sidecar has been taking on more cyber risks in recent years, sources said.
-
Their view that “investors have never had it so good” speaks of a market in an upbeat mood as of January.
-
Potential rotation of the investor base, along with continuing evolution in ESG and non-cat products, are set to be themes for the upcoming year.
-
Key themes of the renewal that resonated across the ILS investor base include the elevation of attachment points, though lack of take-up of named perils coverage may disappoint some.
-
Cedants are grappling with rising rates while coverage narrows.
-
The market is characterised by rising prices and shrinking deal sizes as investors pick and choose over which bonds to back.
-
Tension is emerging at the reinsurance level over the retrenchment from all-perils coverage, which previously offered ‘sleep-easy protection’.
-
The European cat market is hardening faster than expected but the process is being delayed by ongoing negotiations over retro protection and varying lists of reinsurer demands to improve terms.
-
Hurricane Ian’s legacy will undoubtedly lead to some shake-ups in the ILS sector, with ongoing progression outside cat and ESG strategies likely to be a focus.
-
Investors are in the driving seat and able to ask for improvements such as higher extension spreads.
-
Expansion is set to be a trend across Lloyd’s as syndicates look to capitalise on a hardening market.
-
Initial loss estimates for the last quarter show lower hits to equity than observed after hurricanes Harvey, Irma and Maria five years ago.
-
Some firms have fared better than others in the competition to raise funds during the year.
-
Most ILS firms are marking the Ian loss as a $50bn+ event, although there are exceptions.
-
Transparency and alignment of interests are the keys to expanding casualty ILS.
-
The Gulf Coast state is keen to distance itself from Florida’s insurance woes but is resistant to some underlying changes.
-
Early reporters emphasised an ongoing demand for structural change.
-
For larger top-end ILW triggers, cedants may have to be pragmatic on rolling over capital.
-
The outcomes were better than the Swiss Re global cat bond index decline after the major hurricane.
-
Amid a wide range of industry loss estimates, it is clear that ILS trapped capital will be a major issue for 2023 with back-of-the-envelope calculations suggesting at least double-digit billions held.
-
Research by sister title Inside P&C shows the top three homeowners carrier exposures by county for forecast highest impact areas.
-
Cat 4 Hurricane Charley made landfall on Florida’s west coast in 2004, while Tarpon Springs (1921) was the last major storm to hit Tampa.
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Reinsurers are better positioned to face this storm from a financial point of view – to Florida state’s detriment – but how capital providers will react to a loss is the wildcard.
-
With investor fundraising prospects challenged due to macro factors, there are questions over how much US demand growth the ILS market can absorb.
-
How much capacity is available to meet rising cat reinsurance demands was a key theme throughout this year’s Rendez-Vous.
-
A challenged property cat market is expected to open up more opportunities for ILS growth – but the key question surrounds whether and how fast the market can attract more capital to take advantage of this dynamic.
-
Some might see the ILS sector as more institutionalised compared to personality-driven hedge funds, but there is little doubt that the original generation of ILS leaders will be hard to replace.
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The firm hopes to offer investors legacy and live risk in the future.
-
Industry experts told Trading Risk why underwriting guidelines and trust in counterparty management teams are essential.
-
The industry is sharpening its exposure forecasting capabilities in response to investor demand.
-
Some reinsurers emerged as increasingly positive on the cat space, despite generally subdued risk appetites.
-
No matter what the outcome, further market dislocation is on its way – but there are various band-aid options that could help Florida insurers limp through hurricane season.
-
As ILS players such as Vesttoo seek to grow beyond cat risk, Trading Risk looks at some of the questions surrounding how casualty ILS deals will operate and the amount of risk transfer undertaken to date.
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The hardening rate environment in Florida provided a mid-year opportunity for some, but overall there was little growth.
-
Inflationary pressure, increased demand and negotiations over attachment points are among the factors that reinsurers believe are ramping up pressure in the catastrophe space.
-
Sources say investor capacity may be returning to the market, but hurricane season could “make or break” the market.
-
Succeeding years of nat-cat losses have left aggregate and lower-layer capacity tighter.
-
The segment’s lustre has been dulled by losses and capital trapping.
-
Investors, fund managers and service providers are adapting in the face of potential large losses from secondary perils.
-
Beyond pandemic exclusions, there has been a mixed response to changing ILS terms after the trapping issues.
-
Rates have climbed 20%-35% since 1 January, and 40%-50% year on year, sources estimated.
-
Reinsurers secured concessions on terms and hiked rates as most insurers managed to patch together cover to enter hurricane season.
-
Cat bond spreads settled 11% above sponsor targets as many deals were scaled back or parked.
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Industry association FAIR said a full reinsurance backstop should be provided.
-
Major ILS providers active in Florida including Nephila and Aeolus lifted assumed premiums.
-
Sources close to the industry are calling for litigation reform as a priority, while Florida Hurricane Catastrophe Fund expansion is also on the cards.
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Several firm-orders have been released, but there are widespread expectations of a much-delayed renewal as low-layer capacity remains elusive.
-
Despite a move away from non-official indices, global ILW trading is still sometimes relying on a patchwork of triggers.
-
Experts say cyber ILS offerings including cat bonds could be near, but concerns over structures, modelling and correlation persist.
-
Spreads weighted by volume have increased by 71 basis points year on year.
-
The $500mn of new demand from Allstate highlights carrier need for cover after Ida, but pulling together cat capacity in the peak US market remains a tougher ask.
-
Exposure management is prevalent and underwriting profitability is patchy.
-
Wind XoL rate increases are tapering off, while cedants push for commission increases on quake quota-shares.
-
Combined with a challenging fundraising landscape that is likely to have led to investors cutting more deals, 2022 will be a year of fiscal pressure.
-
The rating agency’s model update will increase focus on one-in-500-year PMLs
-
Scor’s renewals update denotes a continued push to control volatility while Hannover Re is focused on growth.
-
Resilience bonds attempted to link up financial goals that proved to be too mismatched.
-
The impact of Hurricane Ida and other 2021 losses, compounding issues with the industry’s five-year track record, has shown up in the slide in assets under management.
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There is a lack of capacity for aggregate deals, and moves towards more named peril coverage.
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Retro renewals have made major progress in early January, but programme gaps remain at some levels, with reinsurers left carrying more risk net.
-
ESG, non-catastrophe and rebuilding after personnel changes will be among the themes of the year.
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The dynamics that have pushed cedants and investors into the space will continue.
-
Property cat rate increases this January were double those of last year and the highest since 2014.
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Some programs had to be restructured as rates hardened and capacity flowed away from cat risk in some cases.
-
Many private deals featured in final renewals negotiations as overall cat risk appetite was cut back, with some ILS segments hard-hit.
-
As the renewal is expected to spill over into 2022, the two-speed market will put pressure on retro-reliant carriers.
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Pricing was generally stable but investors are showing more aversion to specific climate-exposed perils, sources noted.
-
The shortage of sidecar capacity could have a knock-on impact to broader renewals.
-
Personnel turnover and ongoing redevelopment into new areas were the notable themes of the past 12 months.
-
1 January renewals are running late across the board as reinsurers hold out for improved terms, but the retro segment is the most challenged for capacity.
-
The topic of quota-share support is becoming all the more crucial because supply is shrinking at the same time as demand is rising.
-
Nearly three months on, the event still seems heavily stacked towards residential claims.
-
ILS Capital described it as “the ultimate short-tail risk” but noted structural and sourcing challenges for ILS writers.
-
The retro renewals are barely underway, as a challenging fundraising environment and queries over loss experience has delayed the typical pace of progress.
-
Review of quarterly financial updates released so far shows Bermudian carriers wearing major losses.
-
Sidecars have lost some of their lustre in recent years but are still generally seen as an efficient diversifier.
-
Re-allocation of capital rather than true growth seems to be a more likely outcome for the sector in the near term.
-
This comes after PIC said it would challenge the buyout offer last week.
-
Surpassing the $30bn threshold will trigger more occurrence covers, as another painful year looms for aggregate writers.
-
The new generation of vehicles is driven by a lively legacy market and innovations in structuring deals for long-tail risk.
-
The carriers with the largest Louisiana market shares also ceded more than $100mn to Lloyd’s syndicates during 2020.
-
It recognised the debate surrounding the “plausibility” of such scenarios.
-
Aggregate deals remain an exposure, but overall Ida should be a more readily digested loss than surprise disaster scenarios.
-
Increasing workforce diversity may be an easier goal than closing the widening protection gap.
-
It comes amid fears of increased levels of inflation given the low interest environment and high levels of government recovery spending.
-
With investors’ decision-making increasingly influenced by ESG concerns, the ILS industry is grappling with the challenge of how best to articulate its credentials.
-
Fee income – an area of patchy disclosure by reinsurers – was generally stable amongst early reporters.
-
Sources told Trading Risk that a different kind of investor was interested in ILWs compared with retro cat bonds.
-
Huge disputes over aggregation of claims and ongoing coverage disputes point to uncertain overall exposures.
-
Cat bond fund managers continue to reap growth as the industry has rebounded from its Covid dip.
-
Local government pensions funds in the UK are partnering up, creating new strategies and may seek diversification.
-
ILS managers said that large volumes of new issuances could carry on through the rest of the year.
-
Reinsurers are talking about a new era of elevated risks, but their behaviour may signal a more relaxed view heading into 2022.
-
As new modelling tools emerge, we look at the benchmarks that ILS managers believe are appropriate for long-term stress tests and the shorter-term challenges.
-
Local executives expect the island to weather global reform efforts in light of Bermuda’s other advantages and the time it will take to implement minimum tax levels.
-
Sources suggested the ESG credit for using green collateral is overshadowed by longer-term ambitions for underwriting clarity.
-
New and growing carriers helped to fill out treaties as Sompo stepped back from a market that came in flatter than expected for remote risk.
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The funds made a $93.9mn loss in 2019, ahead of a leadership changeover at legacy adviser Armour.
-
Berkshire, along with some other expansive reinsurers, grew its level of assumed reinsurance premium from top Florida insurers significantly in 2020, as the ILS market share dropped overall.
-
Efforts to curb covers for the most carbon-heavy assets are gaining pace and the infrastructure that allows for Paris alignment on the liabilities side of the balance sheet is improving.
-
Whatever their eventual impact on runaway loss inflation the fact reforms were enacted at all is a happy surprise for the industry.
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Pockets of the distressed Florida market are still expected to face a challenging renewal, but much of the remediation was carried out last year.
-
Many carriers agreed on the growing attraction of primary markets but differed on reinsurance-expansion tactics.
-
The February Deep Freeze has already pushed cedants to access reinsurance, adding fuel for rate rises later this year.
-
Reinsurers are still hoping to achieve double-digit rate increases, but brokers and cedants suggest this is unlikely against the context of strong reinsurance supply.
-
Senator Jeff Brandes and local insurance law experts tell this publication that the state’s insurance market will be hugely vulnerable without reform.
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Overall growth in the quarter was modest but the market was faced with some major non-renewals.
-
The EU’s SFDR is the first major regulatory attempt to codify ESG disclosure requirements, and other regions are expected to introduce similar rules in the future.
-
Reinsurers still have concerns over rate adequacy as views of typhoon risk evolve.
-
Environmental, social and governance concerns are of growing importance to the ILS industry, but work remains to be done on building a consensus about concrete goals.
-
The loss is steering more towards a personal lines event, with loss notifications leading to more optimism amongst reinsurers.
-
Amid an April renewal that resulted in a slower pace of typhoon rate increases, ILS deals covering Japan have held up above historic lows.
-
Reinsurance underwriters and brokers anticipate a Japanese renewal largely unaffected by Covid-19 as negotiations continue to focus on payback for 2018 and 2019 typhoon losses.
-
One primary vehicle delivered a significant loss but many others are likely to have had their best year since 2016.
-
As Floridian insurers gear up for their mid-year reinsurance renewals, multiple issues are set to make it another challenging year for both sides.
-
Trading data showed the market delivered on liquidity in the midst of the pandemic panic.
-
As some in the market believe the winter claims will remain notably below $20bn, there are multiple factors creating challenges in assessing the event.
-
Some pointed to low average costs to fix burst pipe claims, while others warned that BI could drive up losses.
-
Aggregate cat bonds and quota shares may be exposed although the loss would typically be expected to skew to the traditional binders and insurance market.
-
While uncertainty over Covid may limit early commutations, isolated deals may have been struck, as 2017 contracts in some cases remain open.
-
One estimate suggested around $2bn of new capacity in private deals.
-
Fenchurch Law partner suggests "aggressive" initial claims adjustments will be unwound and the reinsurance context will need specific consideration.
-
Returns have disappointed some institutional investors, but prospective rates may attract fresh investment, sources said.
-
The sector has received a post-Covid boost heading into January, with strong interest in liquid cat bonds, but challenges around structures, pandemic exposures and lifting ESG commitments will remain.
-
Specialist AuM rose 3% over the half year to 1 January, with Leadenhall, Fermat and Hudson Structured the biggest gainers.
-
On an annual basis, lawsuits were 1% up on 2019 despite success in cutting back AOB cases.
-
Slew of maturities and competitive pricing environment make the cat bond market attractive for sponsors, brokers say
-
There were nearly twice as many new issuances than in 2019, but margins have remained elevated in the post-pandemic rebound.
-
US cat renewals are outpacing European increases, but as signalled earlier this month, the level of rate hikes has fallen back.
-
Despite reduced capacity, ILS market players have been busy redeveloping their offerings.
-
The ILS manager is in cost-cutting mode as assets shrink, but the run-off may lead other ILS managers to reconsider their tactics with rated platforms.
-
Occurrence retro rates are among the segments where rate pressure is abating, although the outlook remains somewhat opaque in a late renewal.
-
The capital skewed to scale-ups, London and carriers targeting both primary and reinsurance business.
-
Cedants and reinsurers perform a "slow dance" around pandemic losses, with claims negotiations deferred beyond renewal.
-
A more diverse investor base is supplanting continued cutbacks from some ILS players, although Stone Ridge's participations are holding more stable than in prior years.
-
Pessimism around trapped capital is growing, but low reported losses may mitigate the issue.
-
Suncorp, IAG and QBE reinsurers could face significant recoveries after a landmark court ruling.
-
A fresh BI ruling in Australia this week highlighted the industry's reason for caution over Covid exposure as legal actions continue.
-
Purchasing the analytics firm will help Willis meet growing demand for climate change services.
-
Reinsurance demand will be up in the near term, but a stronger if smaller pool of carriers would be another desirable outcome.
-
Repeated pelting from smaller cat losses presents a host of challenges for carriers.
-
Greater investor demand is being supported by a focus on liquidity and defined perils – but sources caution against over-hyping the shift.
-
Buyers are out early ahead of a challenging renewal, with retro rate hikes set to outpace reinsurance increases.
-
If reinsurers prevail in limiting insurers from aggregating BI claims, this will shield retro markets.
-
Retro structural change will provide a lot of the gains in 2021, with trapping negotiations complicating the mix.
-
Nearly 1,000 insurance disputes over pandemic coverage were filed by the end of July, according to data highlighted by sister title Inside P&C.
-
Proposed plans could open up new routes to Lloyd's for investors, but will there be space for them?
-
With the fundraising season approaching, tensions are rising over several points of dispute.
-
Early Q2 forecasts show Covid-19 losses well short of initial hit to carriers from 2017 hurricanes.
-
The downward move reflects the lagging impact of cutbacks in 2019.
-
Cat bond investors received better risk-adjusted rates on new issuances, but lower risk levels meant average spreads fell year on year.
-
Losses to the Res Re and Caelus ILS series have narrowed from prior investor expectations.
-
Multiple carriers had to revise official terms to get programmes home as reinsurers held firm on price demands.
-
Reinsurers have held the line on pricing as cedants seek to close out deals, with the market showing further hardening.
-
Reinsurers push back on aggregate exposure from cascading covers as market gets more differentiated.
-
Two large ILS managers bucked the trend for alternative retractions, but traditional carriers recorded the fastest expansion.
-
Retro deals are seen as a particular concern over growing fears that trapped capital will again be an issue in 2021, as post-2017 innovations will be tested out.
-
Investment case is the strongest in more than half a decade, but competition for new inflows is still strong in the buyers’ market.
-
Modelling firms said there were too many variables to quantify the impact, but many factors could escalate claims.
-
ILS inflows are expected to dry up with some market segments set to be harder hit than others.
-
Endowments and family offices have been showing interest in the asset class.
-
Spillover from the Covid-19 stock and bond market crashes made for some turbulence towards the end of the quarter despite the impressive volumes issued.
-
Social inflation trends will make BI disputes particularly acute in the US.
-
Mid-year is the next major possible exit date for ILS investors in illiquid strategies.
-
It will take some time to see how much the flight to cash will impact the broader market.
-
ILS market may experience short-term capital constraints, but could benefit from long-term growth, sources say.
-
Legacy and bank financing offers have yet to take off as competitive concerns hold some deals back.
-
Social inflation is not just a Florida issue – it's also top of mind in the casualty market.
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New issuances fell to the lowest level since 2011, amid an uptick in risk levels and US exposures, according to Trading Risk data.
-
Reinsurers pegged 2019 nat cat losses 23 percent lower than the 10-year average, but prior-year disasters created headlines.
-
Intermediaries called the renewal “asymmetric” and “divergent” as rates began to move up after a pressured few years.
-
The main disrupted segments are still aggregate retro and sidecar vehicles, where negotiations over the level of trapped capital have held up the renewal process.
-
Willis Towers Watson has tipped that greater focus will be drawn to ILS domiciles and structures in 2020 amid an “unusual amount of innovation” from existing and emerging jurisdictions.
-
There is a growing confidence that the storm will remain below the $10bn.
-
Cat specialists RenaissanceRe and Everest Re took the highest proportional hit to equity from the Q3 disaster losses, which resulted in an average cost equivalent to 1.7 percent of shareholders’ equity.
-
It will be many months before the $11bn payout agreed between Pacific Gas and Electric Company (PG&E) filters through to the (re)insurance and ILS markets, with this lump sum likely to benefit some parties more than others.
-
Tokio Marine’s $3.1bn bid for high-net-worth (HNW) insurance specialist Pure represents a bid on the growth prospects of the segment, sister title Inside P&C argued in a recent analytical note.
-
A group of ILS funds tracked by Trading Risk produced more robust returns in Q3 compared to last year’s third quarter, despite Typhoon Faxai and Hurricane Dorian.
-
A drive to offer standardised Lloyd's ILS products must be balanced against the need to be flexible, market participants have said.
-
California has become the “loss leader” of the homeowners’ insurance market, according to a new Aon study.
-
The $1bn syndicate signals a move from the carrier to leverage the ability to share risk at the Corporation.
-
The availability of new capital – or the lack thereof – was a hot topic at the Monte Carlo Rendez-Vous.
-
Aon’s plan to launch an auction platform in time for 1 January 2020 suggests a struggle is underway in the reinsurance space for the position of auction technology market leader.
-
Typhoon Faxai losses are unlikely to have a significant impact on the ILS markets, based on current industry estimates.
-
Ratings agencies remain positive on reinsurers boosting their use of retrocession to grow, despite this year’s capacity crunch in the retro segment.
-
Fourteen cat bonds with a combined value of $1.18bn are expected to be a full loss following 2017 and 2018 losses, Trading Risk understands.
-
The handful of reinsurers to disclose third-party fee income lifted this source of earnings by almost a third year on year in the second quarter.
-
M&A activity has made analysing structural conflicts in ILS platforms harder but winners may be those that offer a range of means of access to risk, consultants say.
-
Most reinsurers lifted their exposure to major cat losses heading into 2019, with net written premiums rising further early this year, ratings agencies noted.
-
The momentum for rate increases has built up in a delayed reaction to losses.
-
Typhoon Jebi creep continued to have an impact on performance, with multi-instrument ILS funds reporting an average loss of -0.78 percent for the quarter.
-
Activity in the first half of the year was the lowest since 2011.
-
Ten months on from Typhoon Jebi, there is still considerable uncertainty around why the storm’s insured losses are expected to be so much higher than the initial modelled figures.
-
The ILS market has broadly welcomed moves by the Bermuda Monetary Authority (BMA) to create a new collateralised insurance vehicle, but opinions vary on whether the new rules will prove to be onerous.
-
The industry’s market heavyweights remain split amongst different types of ownership models.
-
M&A deals have resulted in reinsurer affiliated businesses overtaking the market share of independent ILS firms, but asset managers have also grown their share via new launches since 2014.
-
With Nephila’s market share slightly shrinking, RenaissanceRe and Gen Re moved up the Florida leaderboard.
-
The main point of concern has been over lawyers' ability to find new ways around the clampdown on the AOB regime that has led more claims to court.
-
Carriers that wrote more premium include Swiss Re, Munich Re, RenaissanceRe and Everest Re, while Hiscox Re and Axis posted reductions in top line income.
-
Convex will also seek to tackle the cost of expenses plaguing most carriers across the industry by outsourcing non-underwriting functions “horizontally” with a single partner.
-
Returns from ILS funds tracked by Trading Risk fell to an average Q1 return of 0.63 percent to 0.65 percent in cat bond and multi-instrument funds.
-
Reinsurers avoided another lacklustre renewal season with loss-affected business in Japan, the US and the retro market attracting rate rises.
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The ILS market has been talking about being on the cusp of making inroads into insurance risks for a few years now.
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Both primary and reinsurance segments incurred losses for the ILS syndicates operating at Lloyd’s in 2018.
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The impact of Hurricane Irma loss creep is coming to the fore ahead of the June renewals.
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Both houses of the state legislature are eyeing up reform of attorney fees involved in litigated insurance claims.
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Q4 loss creep from Hurricane Irma averaged 25 percent amongst the state’s five listed insurers.
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New aggregate demand from Japanese cedants may also present opportunities for ILS markets.
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Both Axis and RenaissanceRe significantly lifted fee income from third-party partners in 2018 as increased volumes and reinstatement income drove more business to be transferred to ILS partners.
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Mitsui Sumitomo Insurance (MSI) now owns 80 percent of Leadenhall Capital Partners after taking over the holding from its international subsidiary MS Amlin.
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A diverse loss year produced steeper wildfire and typhoon losses than initially estimated.
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Hopes for significant rate increases are building.
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The JLT index is below levels recorded in 2016 and around 30 percent below 2013 benchmarks.
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A key question is whether retro dislocation will spill over into reinsurance renewals.
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In the US, renewal results varied widely and wildfire losses were a subject of focus.
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Newer vehicles found it harder to get going as sidecar sponsors struggled to hit their fundraising targets in the January renewals.
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The final couple of months of 2018 brought further pain for sidecar investors.
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Annual cat bond issuance for 2018 has surpassed broker-dealer predictions for a strong post-loss year.
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January 2018 opened the year of the “great reload” for ILS managers.
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ILS funds with life strategies reported substantially higher transaction volumes in 2018, helping to drive growth in assets under management (AuM).
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The retro market is likely to tighten at this year’s renewals as investors pause and reconsider their strategies following another year of substantial losses.
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Insurers are seeking to claim roughly $10bn through subrogation lawsuits against Pacific Gas and Electric in relation to the 2017 wildfire losses.
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Setting up vehicles under the UK’s new ILS legislation in its first year has required huge amounts of time, money and patience.
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January renewals were creaking into order in December after the wildfires locked up the process.
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Heavy wildfire losses in 2018 may have a heavier impact on the ILS market than in 2017.
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Third-quarter catastrophe losses resulted in a 1.8 percent to 5.2 percent hit to the shareholder equity of global reinsurers, with major catastrophe writers all impacted.
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Reinsurance market sources expected Hurricane Michael to cause insured industry losses of $10bn, but the limited number of public loss estimates released to date suggest Florida insurers are hoping it will remain below this level.
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Tokio Millennium Re’s agreed sale to RenaissanceRe will open up an opportunity for competitors to enter the fronting market.
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Two M&A deals in the ILS sector in the past month provide a contrasting view on what kind of acquirers may step forward in the future.
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The Bay and Gulf counties in Florida are likely to the bear the brunt of Hurricane Michael losses.
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A narrower view of exposures to Hurricane Michael suggests the two Florida insurers will bear the brunt of claims.
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Insured losses from Hurricane Michael have been estimated to fall within a wide $3bn to $10bn range.
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US property excess and surplus lines will benefit from rate increases in 2018 after the segment took the brunt of losses in 2017.
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The US flood market has traditionally been the domain of the publicly backed National Flood Insurance Program (NFIP).
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Distribution and transaction efficiencies have been targets for InsurTech gains but the time for underwriting improvements will come.
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Conservative initial loss picks may have helped limit adverse development from the 2017 hurricanes, according to JLT Re.
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California has suffered another record-breaking wildfire season but the impact on the ILS market is likely to be marginal, sources have said.
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Almost 30 percent of the ILS funds tracked by the Eurekahedge ILS Advisers index recorded losses in the first half of 2018, with an average loss among this group of 2.82 percent, the index providers told Trading Risk.
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A growing focus on climate change, as well as the increasing breadth of the ILS market, means that investors are considering the argument for ILS as an ESG investment, as well as a diversifier.
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Covea’s reinsurance buying team say they value the face-to-face relationship with cat bond investors.
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Of the listed Florida-based insurers, Federated National and Heritage recorded the greatest increases on their Hurricane Irma losses by the second quarter reporting period.
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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.
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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.
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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.
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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.
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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.
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Recent developments in the sector have underscored the difficulties reinsurers are grappling with as they attempt to work ILS capital into their business model.
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Is the industry ready to accept new attempts to create live trading platforms?
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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.
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The Bank’s insurance analysts warn that the 2017 season is probably not an outlier.
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Cat bond maturities influenced the dip in market share of Florida reinsurance cessions taken by the ILS market.
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Reinsurance rate increases fell short of expectations after hurricanes Harvey, Irma and Maria (HIM), but this could change if the market endures further major losses in 2018, panellists said at the Trading Risk London ILS conference.
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Forecasts range from a slightly more active Atlantic storm season than usual, to below-norm.
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NCM Re's expansion will depend on how much business the insurer writes itself, said Mark Gibson, the company’s alternative capital director.
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A group of 56 Florida homeowners' insurers reported a $407mn aggregate underwriting loss for 2017, equivalent to a 10.4 percent average hit to year-end 2016 surplus.
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Insured losses from winter storms rarely rival those resulting from hurricanes and tornadoes but nonetheless they can still reach billions of dollars and may make their way into the ILS market.
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Trading Risk looks at where InsurTech developments are intersecting with the ILS market and why asset managers and reinsurers are encouraging these new start-ups.
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Cat bond volumes rose to $3.48bn in the first quarter, as diversifying non-US deals bolstered issuance.
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Florida insurers are running up high costs of settling claims linked to Hurricane Irma, as loss adjustment expense levels reach roughly 20 percent or more of total claims, sources have told Trading Risk.
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If ILS capital is designed to be the ultimate home for catastrophe risk, how far should asset managers look to hedge their investors' bets?
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Many of the ILS market folks who gathered in Miami this week for the Sifma IRLS conference would have been hoping for brighter skies than awaited them at home, as storms converged on both sides of the Atlantic.
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The 2017 calendar year was the costliest on record for weather events, with insured losses estimated at $132bn, according to Aon Benfield's Impact Forecasting.
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AIG's surprise move to take over AlphaCat parent Validus continues the trend for reinsurer-affiliated asset managers to dominate M&A activity within the ILS management sector.
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Bermuda-based (re)insurer XL Catlin placed more than $500mn of new catastrophe limit for 2018 and increased alternative market retro support to more than $3bn, as ceding strategies among major carriers diverged following last year's losses.
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Abuse of side pockets in the financial crisis - when hedge funds locked in investors to avoid having to sell off discounted assets - has made the practice less palatable in the wider financial markets.
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Wildfire losses had a varying impact on some of the reinsurer-affiliated ILS platforms in the fourth quarter.
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Diversification has been the flavour of the week for my colleagues writing comment pieces over the past few days, influenced by developments such as RenaissanceRe's move to invest in legacy and life risks.
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Did the reinsurance market get served a half-empty or half-full glass at the January renewals?
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Is the combination of the Harvey, Irma and Maria (HIM) hurricanes a once-in-a-career event for reinsurance underwriters or likely to happen more often?
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Some of the ILS platforms run by the major catastrophe reinsurers appear to have taken heavier losses from the third quarter disasters relative to the burden on their parent companies, but there are a variety of reasons why this has proved the case.
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Is 10-20 percent up the new flat?
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If the ILS market convened for a Thanksgiving dinner this year, on the face of it, it seems pretty clear what they'd all have to be grateful for.
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A small number of personal lines insurers are among those most exposed to the Californian wildfires that occurred last month.
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The retro spiral of the late 1980s nearly finished Lloyd's off. But those hoping that an ILW spiral might entangle and trip up the ILS market in similar complications will have to wait another day.
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Third quarter catastrophe losses represented a 7 to 14 percent hit to the shareholders' equity of global reinsurers, with major catastrophe writers such as Everest Re, Lloyd's of London, Lancashire and RenaissanceRe the most severely affected
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Four of the listed Florida insurers have ceded more than $1.2bn of third quarter catastrophe claims to their reinsurers, based on estimates from their quarterly disclosures
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US homeowners' insurance premiums are forecast to expand by 2 percent to $93bn in 2017, but underlying returns on equity (RoEs) from the business are still deteriorating, according to Aon Benfield
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US property insurers are pushing for base case rate increases of 10-20 percent on catastrophe-exposed business, even for loss-free accounts, according to a client advisory from broker Lockton
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The Californian wildfires could add as much as another $10bn of industry losses to the 2017 catastrophe tally, as reinsurers debated whether disclosures on third quarter events were keeping pace with expectations
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Reinsurance pricing seems to rely on a certain amount of collective signalling in as much as it does number-crunching - as underwriters gauge how far they can push rates without losing business, by looking for fear in the eyes of their opposition
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The winds of hurricanes Harvey, Irma and Maria have propelled 2017 into being one of the reinsurance market's most expensive years for catastrophe losses ever.
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How well-oiled is the lock on the ILS market's cashbox? That's essentially the question that the reinsurance market has been mulling over in the past month as underwriters look ahead to next year's renewals.
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Reinsurance underwriters might have found themselves in the industry equivalent of the Christopher Nolan film Inception this year - unravelling a complicated loop of narrative threads spilling out from the nightmare losses of 2017.
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Twelve Capital confirmed that it has hired former Barbican underwriter Aaron Coates as an executive director in its London-based sourcing team, a move first reported by Trading Risk
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AIG has appointed Charlie Fry, the former CFO of Novae Group, as head of reinsurance buying, operations and transformation
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Carsten Thienel has left Ed and will join JLT Re Asia Pacific, based in Singapore. Thienel has experience in multiple asset classes, including ILS and retro. He will be reporting to Stuart Beatty, CEO of Asia Pacific, as well as Bradley Maltese, deputy CEO of UK and Europe
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RMS has hired Pete Dailey as vice president to lead flood model development in its California headquarters
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Lloyd's has appointed Kirsten Mitchell-Wallace as head of risk aggregation to replace David Clouston when he steps down at the end of the year
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Willis Re senior vice president Paul Knutson has been signed up by BMS Re US as an executive vice president in its Minneapolis office
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Willis Re has hired former Third Point Re executive Tom Wafer as chairman for its North American operations alongside vice-chairman Jeffrey Livingston, a former Willis employee who rejoins the company from Marsh
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If we were to think of the reinsurance market in foodie terms, it has to be a barbecue joint
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Lloyd's syndicates and Munich Re are the reinsurers most active in covering Puerto Rican insurers, according to analysis from sister publication The Insurance Insider
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The first Hurricane Irma loss estimates released by UPC Insurance and others suggest that the private residential insured loss from the storm could be less than $5bn
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The Kilimanjaro Re series of cat bonds are among around a dozen deals with exposure to Caribbean hurricane risk, as Hurricane Maria hit Puerto Rico as a Category 4 hurricane
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Hurricane Irma will be a major test for the ILS market even though it has taken a more favourable westerly turn for the reinsurance industry, straying away from Miami.
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The common denominator among almost all of Florida's homeowners' carriers is their relatively small capital bases and their heavy reliance on reinsurance.
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ILS providers are well-positioned to take a rational stance on losses from a major event, Nephila Capital co-founder Frank Majors said in a roundtable discussion hosted by AM Best ahead of the hurricane season kicking into gear with Hurricanes Irma and Harvey.
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The Florida insurers that make heavy use of reinsurance from ILS managers include UPC Insurance, Universal and Federated National.
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Hurricane Irma is heading for the Florida peninsula almost a century after the 1926 Great Miami hurricane, which would have been the most damaging storm on record had it occurred today
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Nephila, Everest Re and RenaissanceRe were among the leading reinsurers of some of the top Florida insurers last year, according to data collated by Trading Risk
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High retentions on insurers' catastrophe treaties will shield reinsurers from the brunt of Hurricane Harvey claims, although there could be some cessions.
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Hurricane Harvey will impact reinsurer earnings but is unlikely to spur a reversal in softening pricing, analysts said.
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The latest acquisition by Heritage continues the trend for the larger Florida-based insurers to look to grow beyond their roots into "super-regional" carriers, a dynamic that is not necessarily favourable to their reinsurers.
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Underwriting agencies and fronting carriers continued to see demand from insurance sector investors looking for fee-driven businesses, rather than risk-taking entities, as two more M&A deals in this sector were revealed over the summer.
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Schroders has appointed Alan Cauberghs as head of private assets to oversee its activities in various sectors, including its ILS division Secquaero.
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The four leading modelling agencies - RMS, Air Worldwide, Karen Clark and CoreLogic - broadly agree wind-driven insured losses from Hurricane Harvey will fall in the low billions of dollars.
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The major continental carriers and dominant catastrophe writers are likely to be among the key reinsurers of the regional and specialist insurers exposed to Hurricane Harvey claims.
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Can savings on insurance in the future somehow be leveraged to invest in resilience today?
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Ascot Group has recruited Joe Calise from Guy Carpenter to run Vertical Underwriting Managers (VUM), the first US specialty MGA under its Ethos Specialty Insurance Services platform.
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Average returns posted by a group of cat bond funds came to 0.68 percent in the second quarter of 2017, taking year-to-date gains to 1.36 percent
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Reinsurance and retro buyers obtained further rate reductions at the 1 July renewals, although Australian catastrophe losses led to isolated price increases.
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European ILS sponsors and arrangers need to weigh up a number of considerations as they consider alternative collateral arrangements, write Robert Cannon and Matt Feig at Cadwalader.
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The cat bond market was firmly in the hands of sponsors in the second quarter, with volumes setting a record in a frenetic period that pushed ILS pricing to new lows
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Forecasters are predicting an average to above-average 2017 Atlantic hurricane season, as debate continues over whether a longer-term shift to a phase of reduced activity is underway.
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Scor has appointed Wolfgang Murmann to the new role of head of longevity for Europe (excluding the UK), the Middle East and Africa.
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The main factors in this year's "double-dip" Florida reinsurance renewal were abundant supply, reduced demand from several key buyers and uncertainty over model changes.
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The first quarter of 2017 produced a record volume of ILS issuance for an opening quarter, as competitive pricing drew sponsors to the market
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Nephila's new facility with Marsh will help to kick-start growth of the fund manager's US insurance book, with the deal much more significant in size than its previous arrangement with Amwins
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US commercial P&C rates continued to decrease in Q1 although the pace of softening slowed, according to the Council of Insurance Agents and Brokers (CIAB)
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Collateralised reinsurers and ILS investors received $612mn in ceded premiums from the top 10 Florida insurers in 2016, a drop of 6 percent from $654mn the previous year, according to data collected by Trading Risk
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Reinsurers attempted to "hold the line" on pricing in the 1 April renewals, but carrier demand for business meant rate reductions continued to be on offer for buyers
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Demand for crop reinsurance is falling rapidly, partly due to M&A in the underlying insurance business, sister publication The Insurance Insider reported
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Demand for crop reinsurance is falling rapidly, partly due to M&A in the underlying insurance business, sister publication The Insurance Insider reported
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A decade ago, cat bonds were almost universally rated - usually by Standard & Poor's and sometimes by Fitch Ratings
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Issuers are increasingly choosing World Bank debt as the investment vehicle for cat bond collateral, following an uptick in US Libor yields throughout 2016
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Pressure from ratings agencies to strengthen capital positions could force some Florida insurers to retrench, potentially reducing reinsurance demand, UPC Insurance chief financial officer Brad Martz said at the Sifma IRLS conference
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Florida provides two-thirds of the exposure and margin in the reinsurance industry's US wind portfolio, according to data from Aon Benfield
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Liberty Mutual's new Limestone Re sidecar could pave the way for further disintermediation in the (re)insurance sector, a Standard & Poor's (S&P) insurance analyst said at the Sifma IRLS conference in Miami last month
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Electronic trading in the secondary cat bond market may still be a distant prospect, according to panellists at the Sifma IRLS 2017 conference in Miami
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Hannover Re was among the reinsurers to top up on retro through expanded sidecar placements in the January renewals
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Private cat bond placements have become increasingly common in recent years, but the popularity of these somewhat opaque transactions has been coupled with concerns over their impact on the market's liquidity.
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Some UK pension funds are delaying making decisions on longevity swaps because of a recent increase in pensioner mortality rates, sources have told Trading Risk
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An update to RMS's medium-term hurricane model will result in 8-10 percent reductions to projected annual average losses from US hurricanes for the typical cat bond market risk level of 1-in-100- or 250-year return periods
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Annualised sidecar returns dropped to the low teens towards the end of 2016, as the softening market and catastrophe losses took a toll on performance.
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Alternative market reinsurance capital intakes slowed in 2016, but the sector's rate of growth still outpaced the traditional market, brokers estimated in their reports on the 1 January renewals.
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Retrocession and US property catastrophe rates moved closer to flattening out at the 1 January renewals.
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Sensitivity-case hurricane risk modelling has become the ILS market's standard currency, but would shifting to the base-case scenarios provide greater stability for investors and underwriters?
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A new regulatory landscape and M&A activity created opportunities for the life sector in 2016, as more companies looked to the ILS sector to transfer risk.
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It has been a sponsors' market in 2016, with undersupply meaning reinsurers have been able to exceed target sizes and secure favourable pricing.
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2016 has been a year of diverging strategies for ILS fund managers, with some chasing expansion in specialty reinsurance and others focusing on branching out into new spheres of catastrophe exposure.
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Despite initial fears that Hurricane Matthew could take a significant toll on the Florida (re)insurance market, a shift in the storm's track as it approached the US coastline in early October has limited forecast industry loss levels to the low single-digit billions.
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Third quarter returns from a group of ILS funds tracked by Trading Risk were stable year-on-year.
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Indicative reinsurer sidecar returns for 2016 have dropped into the single-digit range, highlighting the impact of catastrophe losses recorded earlier this year
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Equity analysts suggested that reinsurers were being optimistic in talking up the prospect of the market finding a pricing floor in 2017, as they warned carriers might have to wait another year for flat renewals
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Reinsurers sought to declare that the market was nearing a pricing floor as the Monte Carlo Rendez-Vous kicked off the traditional lead-up to the January renewal season
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Recent research has overturned the traditional assumption that there is no correlation between earthquake risk along the northern and southern parts of the San Andreas Fault in California
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The (re)insurance industry faces disruption and disintermediation as a result of new technologies, reinsurers warned at the Monte Carlo Rendez-Vous last month
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The varied, international nature of second quarter catastrophe events has made reinsurer sidecars the most likely source of losses for the ILS market, as the vehicles help to keep the earnings hit for carriers to a manageable level.
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Second quarter catastrophe losses had a patchy impact on reinsurers' fee income from managed capital.
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Weather risk has come back into the ILS spotlight with the launch of a Market Re private cat bond that uses a parametric trigger to cover a warm European winter event.
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Reinsurer sidecars delivered average increases in fair value of 1.95 percent for the three months from February to April, down from a 2.5 percent average return posted in the same period last year, according to Trading Risk calculations.
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News that Gator Re is almost 70 percent of the way to reaching its trigger point has put aggregate modelling back in the spotlight.
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Brexit market volatility could give a minor boost of $1bn-$2bn to investor inflows into the ILS market, Fermat Capital Management co-founder John Seo said.
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Changes to AM Best's Capital Adequacy Ratio (BCAR) methodology could provide an impetus for US catastrophe-exposed carriers to seek additional tail risk and second-event reinsurance.
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Cat bond spreads fell in response to sparse new issuance in the second quarter, but some market participants tipped that this could create a brighter outlook towards year-end.
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Forecasters agreed the Atlantic is set to experience near-normal storm activity in the coming months, but are still undecided on whether El Niño or La Niña conditions will be the season's key driver.
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Florida Citizens Property Insurance is still planning a major restructure of its reinsurance arrangements in 2017, after notably shrinking its programme this year.
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Catastrophe modellers are increasingly taking into account human-induced earthquakes, after recent research from the US Geological Survey showed that the Dallas-Fort Worth metroplex and Oklahoma City now face the same threat from temblors as California.
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AlphaCat and Endurance stood out for increasing their gross catastrophe premiums year-on-year in the first quarter as most of the cat specialists tracked by Trading Risk reduced their premium base.
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Collateralised reinsurers and ILS investors received $654mn in ceded premiums from the top 10 Florida carriers in 2015, a rise of 12 percent from $586mn the previous year, according to data collected by Trading Risk.
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ILS investors responded to new cat bonds at both ends of the risk-return spectrum with strong demand in a diverse and record-setting first quarter.
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Collateral lock-ups could drag down ILS investor returns by 15-20 percent of long-term expected profits for deals with a moderate chance of loss, according to research by Milliman.
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More than a decade on from the devastating 2004-05 hurricane season, scientists are beginning to debate whether to call an end to a cycle of more active Atlantic cyclone activity
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At the 1 April reinsurance renewal season the market softened for the fourth consecutive year, but reductions have slowed from those achieved a year ago
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The first quarter saw an unusually high volume of Japanese typhoon bonds, as both Mitsui Sumitomo and Sompo Japan Nipponkoa returned to the ILS market
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The London market initiative to attract more ILS business to the city is not designed as an attempt to challenge Bermuda's success in the sector, according to International Underwriting Association chairman Malcolm Newman.
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Specific structures adapted to the ILS market are likely to be required if alternative capital is to expand more broadly into the corporate insurance sector, panellists at the Sifma IRLS 2016 conference agreed.
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Insurers should consider much greater use of securitisation to move to a more efficient "version 2.0" operating model, according to former American International Group executive Samir Shah.
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Hannover Re and Everest Re both added about $100mn of new retro support to their sidecars in January 2016.
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AlphaCat and Mt Logan Re significantly expanded their premium base throughout 2015, as their parent reinsurers continued to build out their asset management platforms.
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Sidecar returns remained in the mid-to-high teens on an annualised basis in 2015, although softening was still apparent.
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The January reinsurance renewals saw diverging outcomes for the US and non-US markets, as Guy Carpenter's global property catastrophe rate-on-line index fell 8.8 percent from a year earlier.
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The retrocession market registered a significant softening of terms and conditions in the January renewals as specialty lines of business were increasingly covered alongside property catastrophe risk.
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The decade-long major US hurricane landfall "drought" since Hurricane Wilma struck in 2005 has been highlighted by the meteorological community, catastrophe modellers and the insurance sector alike as extraordinarily rare
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For any ILS transaction, the structure of the trigger mechanism is critical to determining whether a sponsor receives a loss payment following a catastrophe event, thereby causing a loss to investors
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A change in US reserving rules kicked off the year in the life sector, causing a crunch in the number of reserve financing and embedded value (EV) financing deals, according to Milliman
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The ILS funds market caught the M&A fever seen across the traditional reinsurance sector this year as its rate of growth significantly slowed
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The record-setting 2014 was always going to be a hard year for the cat bond market to follow in terms of business volume
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Last month Trading Risk revealed that Credit Suisse is hoping to tap into the ILS market to help insure its operational risks, such as a possible cyber attack or a rogue trader incident.
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The task force established by the London Market Group to develop the UK as a centre for ILS transactions is facing competition from other "onshore" jurisdictions seeking to rival the established "offshore" ILS locations such as Bermuda and Guernsey.
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Trying to compare returns available from primary insurance business to the reinsurance market is like comparing apples to oranges.
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Investors waiting for a catastrophe event to improve rates before deploying capital into ILS may be failing to understand the fundamental value of the asset class, according to speakers at the Trading Risk New York Rendez-Vous.
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The creativity of the ILS market is increasing its value to reinsurance buyers and outweighing its mono-line focus on catastrophe risk as cedants increasingly push counterparties to write multiple lines of business.
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Credit Suisse Asset Management (CSAM) will seek to bring new investors into Humboldt Re in the future but its growth will depend on market conditions, the firm's head of ILS Niklaus Hilti told Trading Risk.
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Proposed changes to AM Best's method of calculating capital adequacy for (re)insurers could boost demand for peak cat cover, particularly from regional US carriers.
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How will climate change impact ILS?
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The mix of cat bonds issued in 2015 is looking notably more diverse than last year as third quarter diversifier deals helped lessen the dominance of North American perils.
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At the recent Monte Carlo Rendez-Vous, the ILS market sent out a clear message that it had come of age and is here to stay
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A group of sidecars followed by Trading Risk are on track to deliver annualised returns of 10.48 percent, according to data compiled from filings made by US fund managers Stone Ridge and Pioneer
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The 10th anniversary of Hurricane Katrina has prompted a number of modelling firms to focus on US storm surge risk, with RMS and Karen Clark & Company (KCC) both releasing studies on the most vulnerable US cities.
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As the UK government has announced plans to become a more attractive domicile for ILS business, it is worth examining how alternative capital currently participates at Lloyd's.
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A group of sidecars tracked by Trading Risk recorded an average increase in fair value of 2.5 percent for the three months from February to April 2015, according to disclosures from sidecar investors Stone Ridge Asset Management and Pioneer.
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AIR Worldwide has completely revamped the way it models storm surge losses in the latest major update of its US Atlantic hurricane models.
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Kortis: How does the first longevity trend bond work?
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On 30 June 2015 the US Court of Appeals for the Second Circuit finally put to rest the ongoing litigation relating to Mariah Re
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Hurricane models have forged the way to express catastrophe risk in financial terms - but there are still many difficulties for investors attempting to analyse their exposures
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Second quarter cat bond issuance this year was dominated by many repeat deals from the same period of 2014, but more subdued conditions prevailed.
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M&A activity has taken off in the reinsurance market over the past year - with integration at some merged companies well underway while the fraught battle between Axis and Exor for PartnerRe continues
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For many European sponsors Bermuda is a favoured jurisdiction for conducting ILS business.
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The US state-backed hurricane insurance pools followed a mixed strategy in the 2015 reinsurance renewals as two of the top three lifted their risk transfer by a third compared to 2014, while the other dropped its cover by almost 20 percent.
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Lloyd's may be seen as an expensive place to do business, but the Corporation's director of performance management Tom Bolt argued in a recent presentation that this idea is exaggerated.
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Lower oil prices are taking their toll on the energy insurance market as record capacity has converged with a fall in demand.
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On 23 April, the US Treasury took its first action since 2003 to curb so-called "hedge fund reinsurance companies".
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Alternative reinsurers and cat bond investors received $589mn in premiums ceded by the top 10 Florida personal and commercial residential insurers in 2014, according to data collected by Trading Risk.
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The two leading reinsurer-managed funds platforms posted a year-on-year fall in fee income during the first quarter, reflecting the impact of running smaller sidecars.
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What does "sensitivity case" modelling imply for quake risk?
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Insurance companies interested in issuing private placement catastrophe bonds offered under Section 4(a)(2) of the Securities Act may benefit from streamlining the structure of a bond, but they must be careful not to strip away important structural elements for capital markets risk transfer.
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Reinsurance remained the key earnings driver for (re)insurance carriers in 2014 even as many chased growth in the specialty insurance market, where rates are under less competitive pressure.
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Stone Ridge Asset Management earned a 4.5 percent average return from its continuing sidecar investments in the three months from November 2014 to January 2015, according to Trading Risk records.
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Cat bond issuance in the first quarter of 2015 hit a record $1.86bn, rising 21 percent year-on-year to comfortably beat the $1.54bn placed in Q1 2014, according to Trading Risk records.
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The volume of five-year cat bonds issued in 2014 rose significantly year-on-year, despite just a few such deals being concluded, Trading Risk data shows.
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When the Gator Re cat bond almost triggered last year it surprised more than a few in the market
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On 22 September 2014, the US Treasury and the Internal Revenue Service (IRS) gave notice that they intend to issue new regulations that would limit certain tax benefits many US corporations claimed were available from transactions in which they "inverted" or were taken over by a non-US corporation
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Panellists at the Sifma IRLS 2015 conference in New York this month were relatively bullish on the outlook for new hedge fund reinsurance start-ups, as former Lancashire founder Richard Brindle launched fundraising for his new vehicle shortly after the event.
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Top-line expansion for short-tail specialists slowed in 2014 as softening market conditions dampened growth opportunities, particularly in property cat.
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Ace stands to earn lucrative fees from its new joint venture with BlackRock, ABR Re, according to a marketing presentation obtained by sister publication The Insurance Insider
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In the landscape of insurance risk transfer, US inland flood risk has been underrepresented
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With the convergence market estimated to have grown by one-third to $60bn in 2014, the number of investors attracted to various ILS structures from within the European Union (EU) has also increased
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Participants in the Florida reinsurance market are expecting some $800mn-$1bn of new demand to emerge from expansive take-out companies in the 1 June renewals this year.
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Reinsurance carriers are increasingly emphasising the importance of scale, as XL-Catlin and PartnerRe-Axis have unveiled merger plans that will propel them into the top 10 and top five respectively by premium base
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Non-life reinsurance premiums ceded by Europe's 20 largest cedants in 2013 declined by 8 percent year-on-year to EUR39.2bn, according to a report published by AM Best.
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Reinsurance brokers and carriers fear that the recent flurry of M&A activity in the sector may cause further reductions in demand
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The temporary lapse of the US Terrorism Risk Insurance Program Reauthorisation Act (Tripra) over the Christmas period highlighted the market shortage for terrorism (re)insurance cover.
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The US Commodity Futures Trading Commission (CFTC) issued a letter last month that provides relief from registration for entities characterised as the commodity pool operators (CPOs) of ILS issuers.
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Stone Ridge Asset Management's fleet of sidecars made an average gain of 8.2 percent in the three months to 31 October, according to the manager's latest annual report.
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US property cat rates fell by 7.5-15 percent in the January 2015 renewals, although Guy Carpenter's European CEO Nick Frankland described the reductions as "no drama".
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Guy Carpenter has estimated that the convergence market grew by a third in 2014, rising from $45bn to $60bn in size.
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Q: A number of this year's Florida cat bonds used "cascading" structures - but what does this cover provide?
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As the shape of today's insurance market continues to morph, tax law has lagged behind in its feeble attempts to force novel concepts into rusty old boxes.
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In a memorable year for the cat bond market, 2014 brought forth both the largest ever transaction and the lowest coupon deal amid a number of other milestones.
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The operational expense base of some of the industry's largest reinsurers equates to about 10 percent of their shareholders' equity, analysis of their 2013 annual results shows.
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The catastrophe specialists among the peer group of short-tail Bermudian reinsurers tracked by The Insurance Insider's Data Room focused on other business lines to deliver top-line premium growth in the third quarter
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With fresh data breaches hitting the headlines on a daily basis, cyber risk insurance is becoming increasingly difficult to ignore.
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The SEC recently adopted new final diligence rules that require issuers and underwriters of rated asset-backed securities to file third-party diligence reports with the regulator.
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A group of major reinsurance buyers emphasised their desire to maintain a broad-based panel of counterparties during a panel debate at last month's Trading Risk New York Rendez-Vous.
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The expansion of Florida domestic insurers (FDIs) is a potential growth opportunity for the ILS market, according to Heritage Insurance chairman and CEO Bruce Lucas.
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Rising interest rates and a growing ILS market are not mutually exclusive ideas, according to the managing director of global public markets at Tiaa-Cref.
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Fermat Capital co-founder John Seo said ILS funds should not try to mimic the reinsurance model because they would not be able to "outdo Munich Re or Swiss Re at their own game".
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The primary US insurance market could open up greater potential volumes of business to the growing ILS sector but there are several challenges ahead for funds trying to access this market.
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Q. How does the pricing process for cat bonds work?
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The recent Mariah Re dispute serves as a reminder to participants in ILS transactions of the value of clear and transparent legal documents and disclosures to mitigate the litigation risks when claims materially exceed modelled losses.
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The Mariah Re tornado bond lawsuit has resulted in legal changes designed to reinforce the independence of cat bond administrators.
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Reinsurer sidecars have accumulated average returns of 8.3 percent for the first seven months of 2014, according to the latest quarterly filings from mutual fund manager Stone Ridge.
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Short-tail cat specialists came under pressure during the second quarter of 2014 as softening market conditions hit the peer group's results at multiple angles, according to analysis by The Insurance Insider's Data Room
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A handful of reinsurer sidecars accrued average returns of 3.8 percent during the first four months of 2014, according to the latest results from mutual fund manager Stone Ridge
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ILS fund managers may write as much as four times the amount of premium per employee as rated reinsurers, according to Trading Risk estimates
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Aviation rates are poised to rise after a year of heavy losses for the niche insurance market, with Brit Insurance CEO Mark Cloutier predicting rates could increase by up to 50 percent.
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Catastrophe bond investors and cedants typically have limited visibility of forthcoming transactions, due to now-repealed US securities law restrictions on general solicitation that have enforced radio silence on participants until a deal is formally launched.
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Q. When is the North Atlantic hurricane season peak?
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As regulators continue to build the legal edifice of Solvency II, the European Insurance and Occupational Pensions Authority (Eiopa) has released new guidelines on basis risk and risk mitigation.
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The Caribbean Catastrophe Risk Insurance Facility (CCRIF), through the World Bank, was one of eight new sponsors to come to the cat bond market in the first half of 2014, pushing total issuance volumes above $6bn
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Can the Sharpe ratio be applied to ILS?
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The US Commodity Futures Trading Commission (CFTC) issued a letter last month that suggests that directors of catastrophe bond issuers may have to seek no-action relief from the CFTC from registration as commodity pool operators (CPOs).
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As the property cat reinsurance market continues to soften, many state-backed US insurance pools are significantly expanding their levels of cover.
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Bermudian reinsurers have taken advantage of falling rates and ceded a significantly higher proportion of their business to retro writers in the first quarter of 2014, according to analysis from sister publication Inside Data.
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In this special project, Trading Risk worked with modelling agencies to highlight the range of expected loss outcomes from cascading annual aggregate cat bonds.
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How does the US hurricane season impact ILS valuations?
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Over the past year the number of reinsurer sidecars and collateralised vehicles has proliferated, allowing reinsurers to leverage their underwriting expertise and distribution networks and giving investors exposure to unique asset classes
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Investors are expanding the array of risks they are interested in as they seek to diversify their reinsurance portfolios, according to Mike Millette, global head of structured finance at Goldman Sachs
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Alternative reinsurers and cat bond investors captured 17.6 percent of premiums ceded by the top 10 Florida personal and commercial residential insurers in 2013, up from 14 percent in 2012, according to data collected by Trading Risk
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The Everglades Re renewal from Florida Citizens Property Insurance offered one of the starkest examples of the swingeing rate reductions that have occurred in the Sunshine State over the past two years
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Single-shot reinsurance covers are increasingly being deployed as cascading covers that include an element of aggregate risk, in a sign that the sharp softening seen in the run-up to the 1 June Florida renewals has started to spread from pricing to terms and conditions.
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Q What leads ILS premium multiples to vary?
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Rules aimed at clamping down on US tax dodgers will land cat bond issuers with new disclosure requirements, but the burden could be lighter than anticipated
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Capital market carriers did not really make inroads into the Japanese market at the 1 April renewals, Willis Re International chairman James Vickers told Trading Risk.
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Premiums softened by more than expected at the 1 April reinsurance renewals as reinsurers showed they were not prepared to be beaten on price by alternative capital, brokers said.
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Comparing two recent soft markets in ILS - northern hemisphere spring 2011 and autumn 2013 - highlights the need to consider other ways of measuring risk than on a straightforward multiple basis, according to a recent report from Lane Financial.
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The new generation of casualty reinsurers backed by asset managers potentially offer a broader proposition than previous hedge fund initiatives. But they must be able to demonstrate long-term commitment to win over buyers, says Andrew Newman, head of casualty at Willis Re.
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New rated reinsurance vehicles may be being driven by investors wanting access to particular asset managers' strategies, but there remains some capital markets interest in casualty risk for its own sake.
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As two reinsurance vehicles backed by asset managers moved closer to launch this month, casualty market participants are speculating that these new start-ups may lead to a similar revolution to that which has transformed the property cat sector.
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Trading Risk looks at how fund managers use modelling tools
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The retrocession market provided significantly more aggregate capacity during the 1 January renewals as demand for occurrence covers shrank, Credit Suisse Asset Management's head of ILS Niklaus Hilti told Trading Risk
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The convergence market contributed $10bn of growth to the reinsurance industry's capital base in 2013, Guy Carpenter estimates.
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Property catastrophe rates came under significant pressure at the January renewals but underwriters broadly maintained discipline on policy terms and conditions, sister publication The Insurance Insider reported.
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Some major property catastrophe cedants chose to take advantage of softening rates to purchase extra reinsurance cover at the January renewals, but others consolidated and trimmed their purchasing.
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New sidecar launches continued in early 2014 following a prolific round of 2013 activity, as P&C (re)insurers formed a total of nine known vehicles with just under $2bn of capital.
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The January 2014 renewals will feature more "club" deals that are concluded with a handful of large catastrophe specialists, which will lead to less business being placed in the subscription market, sources said.
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Early indications suggest that international property catastrophe reinsurance prices will soften by an average of 10-15 percent at the 1 January renewals.
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It wasn't a hurricane or any other natural disaster that prompted the 2013 wave of reinsurance sidecars, but rather a shockwave within the industry caused by the growing clout of ILS fund managers.
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It has been a long time coming, but the cat bond market has finally returned to its pre-crisis heights, with 2013 issuance set to reach $7.5bn if all three bonds currently in the pipeline close on target.
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Hiscox elbowed its way up the ranks of reinsurer ILS managers when it announced during the third quarter reporting season that it expected to deploy $200mn of third-party capital in 2014.
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The next wave of ILS investors could emerge from a different source than the pension fund capital that has backed its development, according to speakers at the Trading Risk New York Rendez-Vous last month.
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The California Earthquake Authority (CEA) added a new three-year $100mn contract to its reinsurance programme in the mid-year renewals as it increased multi-year cover to more than a third of its overall limit
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London-listed Catco has picked up almost a 20 percent share of the estimated $9bn indemnity retrocession market since it began underwriting at the start of 2011
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A good amount of work is already underway for early January reinsurance renewals as buyers seek to lock in favourable pricing and place significant limit outside the subscription market.
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Mutual funds are likely to increase their role in the ILS market in the future, Aon Benfield Securities predicted in its 2013 review of the sector.
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As ILS premiums tumbled in the first half of 2013, market commentators described the phenomenon as a "decoupling" of cat bond prices from the traditional reinsurance market.
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Opportunistic retro purchasing helped many (re)insurers cut back their exposure to major catastrophe events as they headed into the peak North Atlantic windstorm season.
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Claire Souch, vice president of Model Solutions at RMS, explains the vision behind the RMS(one) platform and what changes the company believes it can make to ILS fund managers and reinsurer underwriting teams
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2013 is shaping up to be the strongest year for cat bond activity in six years, with a record-breaking $4bn of new issuance having been brought to market by the end of June - topping the $3.8bn issued in the first half of 2007
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Brokers have increased their grip on cat bond distribution in the past couple of years, according to statistics compiled by Trading Risk
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The number of unrated cat bonds has increased sharply in 2013 as sponsors forego the expense of seeking a rating
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ILS fund managers have perhaps never faced a more challenging time to keep their capital inflows in pace with investment opportunities, despite making significant inroads into the property catastrophe reinsurance market and with ILS issuance on track for a bumper year
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Florida Citizens Property Insurance was a stand-out example of the alternative reinsurance market lifting its market share at the 1 June renewals, as hedge fund-backed reinsurer DE Shaw and Bermudian fund manager Nephila Capital put down significant lines of capacity on the state insurer's traditional reinsurance programme.
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Reinsurance quoting activity stabilised in Florida at the 1 June renewal after much more volatile pricing conditions in 2012 and 2011.
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Reinsurance buyers continued to look for greater aggregate or sideways cover at the mid-year renewals - a trend that works to the strengths of capital market reinsurers as they continue to lift their market share.
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Sidecar fees remain above the standard rate for ILS fund managers but are also coming under pressure in a softening property catastrophe market, Trading Risk understands.
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The capital markets undoubtedly dampened rate conditions at the 1 April renewals and are also having a "dramatic" influence on expected pricing at the June and July renewals, according to GC Securities' review of first quarter activity in the ILS market.
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Capital market reinsurance capacity could rise by one third over the next three years to provide $57bn of limit by 2016, GC Securities estimated in a recent new Clear Path Analysis ILS market report.
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Reinsurance programme restructures from two very different buyers in the lead-up to the key mid-year wind renewal have provided early evidence of an expected increase in participation from alternative providers in the traditional open market for US cat reinsurance.
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Niklaus Hilti, ILS manager at Credit Suisse - the second-largest operator in the ILS fund sector - said last year that reinsurers trying to take on the funds management business "all think this is El Dorado".
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Swiss Re now ranks 2011 ahead of 2005 as the costliest catastrophe year ever for insurers, according to the reinsurer's latest Sigma report.
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The ILS market is maintaining discipline even as strong demand pushes down pricing, participants at the inaugural Sifma Trading Risk roundtable argued.
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Dion Williams from law firm Taylor Wessing explores some of the issues investors in the latest generation of sidecars should be aware of
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Reinsurers are likely to pursue third party capital structures with longer-term horizons such as cat funds or permanent sidecars in 2013, while the number of temporary, opportunistic sidecars looks set to diminish, a panel of experts agreed at the annual Sifma ILS conference.
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The future of the Texas Windstorm Insurance Association (TWIA) is looking increasingly uncertain as the US residual insurance market heads toward the reinsurance renewal season.
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The ILS market's track record does not yet reflect the true "tail risk" nature of the asset class, research firm Conning warned in a new report on the market.
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Reinsurers provided a varied account of the 1 January renewals as they reported their 2012 results, with the most bullish putting US rate movements at +5 percent while others suggested that rates were down
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Although significant institutional capital may be sitting on the "sidelines" of the alternative reinsurance market other factors are preventing more pension funds from being attracted to the space, fund advisers say.
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Reinsurers such as Everest and XL have said their expansion into funds management would not cost their existing investors, as analysts quizzed them during the February reporting season on how these moves would affect their business.
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The spotlight is already shining strongly on the highly attractive $3bn Florida market ahead of the 1 June renewals as a series of developments stoke reinsurance demand.
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Segregated accounts companies (SACs) and special purpose insurers (SPIs) have been a considerable boon to Bermuda's insurance industry, but are they being used to their full potential? Appleby's Tim Faries and Brad Adderley look at the options
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US property catastrophe pricing was roughly flat at 1 January as the recent losses from Sandy and ample capacity pulled the market in different directions, according to reinsurance brokers Guy Carpenter and Willis
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Reinsurers are facing pressure to "keep up with the Joneses" in convergence, one Bermudian reinsurance executive noted, as sidecar renewals continued after 1 January despite plentiful traditional capacity
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Throughout 2012 reinsurers have rushed to pick up new convergence talent and build out their third party funds management arms in response to growing investor interest in the sector.
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This time last year the specialist ILS fund market was abuzz with talk of potential consolidation as a question mark hung over the future of two of the largest asset managers in the sector.
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The catastrophe bond market pulled ahead this year to grow outstanding volumes for the first time since the 2008/09 financial crisis, as annual issuance stayed on track to hit the $6bn volume forecast and easily surpass the 2011 total of $4.8bn.
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Hurricane Sandy's unique profile will test how well the PCS industry loss compilation service covers certain claim categories, as buyers of industry loss-based covers wait to see where the event will settle.
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Alterra Capital president and CEO Marty Becker admitted that inexperience with fundraising requirements was one of the problems for reinsurers targeting third party capital.
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Specialist ILS fund managers have set a high bar for reinsurers trying to enter the fund management sector, with some new entrants still falling short of demonstrating a "fund mentality", according to speakers at the annual Trading Risk Rendez-Vous hosted in New York last month.
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There is a tremendous amount of capital trying to find its way into the ILS space, but the market needs to grow to capture this investment, Aon Benfield Securities CEO Paul Schultz said at the 2012 annual Trading Risk Rendez-Vous.
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Attempts to model losses from Superstorm Sandy has presented some unique challenges, but nevertheless the storm fits within the expected range of outcomes for a north-east hurricane, modelling firms say.
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As projections for industry insured losses from Sandy creep upwards towards $25bn, the impact on both the traditional and non-traditional reinsurance markets inevitably looks to be rising.
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Capital market providers are largely creating new reinsurance demand rather than carving out capacity from the traditional market, Nephila Capital co-founder Frank Majors said at an ILS panel hosted by Munich Re at the Monte Carlo Rendez-Vous last month
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Absent a shock loss in the final months of the year, premium rates are expected to slide at the key 1 January renewal, when upwards of half of all property catastrophe reinsurance business renews, Trading Risk understands
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The increasing role of the capital markets in the reinsurance sector was one of the major themes of the 2012 Monte Carlo Rendez-Vous, but ratings agencies differed on the alternative market's impact
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Nephila Capital co-founder Frank Majors warned that reinsurers face a number of potential pitfalls as they target the funds management arena
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The catastrophe retrocession market has grown by nearly 20 percent over the past two years and will deploy a record $9bn of indemnity limit over the course of 2012, Aon Benfield estimates.
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ILS market participants are predicting substantial growth over the coming few years after enjoying a bumper 2012, which is encouraging more and more traditional reinsurers to dip their toes into the sector.
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Willkie Farr & Gallagher associate Matthew Stern looks at the impact of US judicial decisions on the ILS market
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US property catastrophe pricing showed further signs of abating at the 1 July renewals, with reinsurance rate rises cooling after a year of increases and evidence emerging of a less favourable retrocession market
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Reinsurers are revising their view of the role they play in the convergence markets as they increasingly target third party funds management business, according to various commentators
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Luzi Hitz and Eduard Held argue that the market now has the building blocks in place to trade UK flood risk.
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With the mid-year renewals in full swing, Trading Risk explores the convergence markets' inexorable march into underwriting reinsurance risk.
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P&C (re)insurers have moved towards a new "paradigm" where a smaller core balance sheet is complemented by off-balance sheet ventures that provide less volatile fee income and a more efficient way to flex capital, says Goldman Sachs head of structured finance Michael Millette.
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Charles Collis and Michael Frith from Conyers Dill & Pearman look at the moving currents of "hard-wired" ILS structures
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Most reinsurers are still talking up the mid-year US property cat market and insisting that the 10-15 percent rate increases seen at 1 January can be replicated, but the first cracks in the façade of market confidence have become apparent
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Industry investors said recent reinsurer start-ups such as Third Point Re and PaCRe might work for their hedge fund backers but questioned the rationale for other investors, speaking at an event hosted by sister publication The Insurance Insider this month
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The capital markets are benefitting this year from a continued drive among state-backed US insurance carriers to offload their risk due to tight budgets and the rising cost of traditional property cat cover
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ILS fund managers operating in Europe will soon have to deal with a host of new regulations set to come into force five years after the financial crisis. Leonard Ng lays out key elements of the new legal frameworks that will place hedge funds under closer supervision
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ILS fund managers may have been raking in new capital over the past year but their market share as cat bond buyers is declining as activity among generalist investors picks up
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Risk Management Solutions manager Jinal Shah explains how the modelling firm's new Miu Pricing platform aims to help fixed income investors analyse catastrophe risk.
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1 April will be a tense and uncertain renewal for Japanese reinsurance buyers, sister publication The Insurance Insider has reported, but early indications are that premium rates will rise strongly.
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Leading ILS fund managers John Seo and Frank Majors may run two very different shops, but both urged the market not to give into "reinsurer envy" by seeking to diversify their portfolios, speaking during panel discussions at the Securities Industry and Financial Markets Association New York conference at the start of March.
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ILS fund managers have taken their fair share of growth over the past two years, but as the property catastrophe market hardens will they be the first port of call for investors lured by rising rates?
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Rising property catastrophe premiums gave reinsurers a bright spot as they unveiled sagging 2011 results in the opening weeks of February.
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ILW volumes will rise 25% in 2012, predicts Willis Re's Henry Kingham. He looks at the factors that put the wind in his sails...
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Reinsurance buyers are taking more interest in capital market solutions after a fragmented and difficult January renewal season, according to the two largest reinsurance brokers
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It's a bright forecast for 2012 as the annual Trading Risk Market Survey showed the convergence industry expects to continue to benefit from new investor inflows, rising pressure on property catastrophe rates and regulatory change.
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2011 has been another stop-start year for the cat bond market as it navigated several major obstacles but sales are now accelerating strongly into 2012.
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Is the ILS investor base becoming too top-heavy?
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Proposed SEC securitisation reforms threaten to wrap more red tape around the ILS market. Dewey & LeBoeuf partner Stephen Rooney lays out the case for ILS to be set apart
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There was a lot of lively debate to match the blustery October weather at this year's Trading Risk New York conference, but a speech from Catlin retro buyer Mark van Zanden sparked one interesting exchange with Fermat Capital founder John Seo over whether ILS investors are asking too much to take on catastrophe risk.
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Cat bond premiums are far higher than they should be when analysed using investment theory models that predict low risk, diversifying assets such as ILS should earn correspondingly low returns...
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ILS fund structures are coming under strain as managers direct more of their portfolios into illiquid collateralised reinsurance instruments, Albourne Partners analyst and ILS investment adviser Michael Hamer said at the Trading Risk New York conference.
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New Zealand earthquake losses may have prompted some traditional reinsurers to question the value of lower-paying international risk this year, but the ILS market still seems intent on adding more breadth.
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RMS RiskMarkets director Ben Brookes examines the impact of RMS US Hurricane Model Version 11 on ILS pricing
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2011 cat losses shook the ILW market. In our regular quarterly review of the sector, Willis Re executive director Henry Kingham looks at the longer-term effects...
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With much of the international (re)insurance market's focus trained on pricing of US and Asia Pacific property cat programmes, the retro market's activities at the mid-year renewals went broadly under the radar.
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Trading Risk explores how ILS fund managers are handling the legal and reputational risks of dicing up their funds to splice out catastrophe losses
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In a similar reaction to that of the traditional markets at the busy June and July renewal season, the impact of the model changes in the convergence sector appears to have been muted.
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Cat underwriters were broadly satisfied at the Florida-dominated 1 June reinsurance renewals, with average risk-adjusted rate rises calculated to be in the 10-15 percent range, according to analysis from sister publication The Insurance Insider.
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Sidecar launches this year are likely to focus on the retrocession markets with $1bn-$2bn of new funds expected to join the market, predicts Goldman Sachs partner Michael Millette.
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The private side of the convergence market has been gaining force over the past year and observers say its momentum is likely to continue after it cleared the hurdle of the Japanese earthquake.
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Catastrophe modelling is not an exact science, but its outputs still hold sway with risk takers. Bill Keogh, president of cat modelling firm Eqecat, urges us to take a leaf out of Donald Rumsfeld's book...
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On the eve of another hurricane season, US cat reinsurers are now widely expected to enjoy typical rate increases of around 10 percent on their mid-year renewal programmes.
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Bermudian reinsurer Flagstone heads the Q1 loss table from sister publication The Insurance Insider, confirming warnings from ratings agency Moody's that the company was experiencing outsized losses from the string of natural disasters so far this year.
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Despite a wave of punishing catastrophe losses in the first quarter, only a handful of reinsurers are in the market for retrocession protection, making for a tense game of "chicken" before the US wind season.
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Although Munich Re's Muteki deal became the first cat bond casualty of the 11 March Tohoku disaster, ratings agencies have taken action on a number of second event bonds now considered at risk for the US wind season.
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Where is capital coming from in the convergence market? Trading Risk has a go at finding the source of funds...
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Cat bonds did not perform as strongly last year as in the heady days of 2009, but Swiss Re said the results showed the market had fully recovered from the financial crisis.
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Is the recent spate of costly earthquakes a deadly trend or just coincidence?
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The ILW market is becoming increasingly bespoke... In our regular quarterly review of the sector, Willis Re executive director Henry Kingham looks at ILW trading drivers.
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The (A)XXX market saw $7bn of deals in 2010. Credit Agricole CIB executives Jorge Fries and Michel Allez look at what keeps the market beating.
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Capital continued to flow into the convergence sector in 2010, as a benign natural catastrophe loss environment and evidence of non-correlation with the broader financial markets caught the attention of both institutional and retail investors.
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Insurance-linked derivatives remain marginal but effective hedging tools
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On the surface, there was nothing to suggest that 2010 changed anything for the life ILS market, which was brought to a skidding halt by the financial crisis.
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2010 wasn't the stereotypical "game of two halves" for the ILS market - it was all about two lightning-paced quarters that racked up sales figures, putting the market in a solid position to challenge the peaks of 2006/07 in the year ahead.
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2011 cat bond maturities: At $3.7bn, it's not a trickle, but the flood of maturing bonds ebbs in 2011.
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It is all too easy to herald the return of the soft market to the ILS sector.Trading Risk has taken the so-called indicators of soft market conditions and compared 2010 to 2007, the last time when there was evidence of abundant capital, cheap rates, broad collateral management solutions, multi-peril bonds, long-term deals and a warm embrace of indemnity triggers.
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Modelling firm RMS is known for its natural catastrophe models. Here Peter Nakada, managing director at RMS RiskMarkets, explains why the firm ventured into the domain of traditional actuarial techniques...
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The sector had its teeth gritted and eyes set on the horizon for the long haul as Trading Risk took the pulse of the convergence market at its annual New York event.
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Traditional market rates are heading downward as the key 1.1 renewal season approaches. Willis Capital Markets & Advisory managing director Bill Dubinsky explores the potential upside for the convergence market.
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The $25bn-$30bn of capital that makes up the Trading Risk universe plays a far more significant role in the property and casualty (P&C) sector than its proportion of the industry's overall capital would suggest.
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The first of four European windstorm bonds anticipated in Q4 2010 - Groupama's Green Valley - priced below guidance, sparking more debate on investors' pricing thresholds for ILS.
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In our regular ILW quarterly update, Willis Re executive director Henry Kingham discusses the speculative nature of ILW trading...
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The big three modelling firms, AIR, RMS and Eqecat, fiercely defend their independence from the commercial impact of their risk models, with commentators lauding modellers' "considerable integrity" in devising their own methodologies.
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As the state of New York mulls plans to funnel compulsory catastrophe insurance premiums into its own wind pool, existing quasi-governmental plans are buying more reinsurance protection from the capital markets.
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Aon Benfield's deputy CEO of Global ReSpeciality, Daniel Burrows, discusses how capital markets have helped to mould the shape of today's retro market.
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As if hedging against Mother Nature wasn't a tricky enough business, weather derivatives dealers have been hard hit by the global market turbulence over the past two years.
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Swiss Re traders Patti Guatteri and Mitchell Mintz walk us through the opportunities for trading (re)insurance risk during a live storm
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As 2010 develops into a healthy year for the cat bond market and US government bond yields reach new lows, some players are leaping on increasing confidence in the markets to push for a return to Libor-linked structures.
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In our regular ILW quarterly update, Willis Re executive director Henry Kingham sees strong Q2 ILS issuance starving ILW buyers of capital markets capacity. ILWs now offer a hard market haven for those with the cash to invest...
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As one of the industry's leading cat bond managers with a global capital market reach, Goldman Sachs has a unique perspective on the ILS market. Here, the firm's co-head of America's securitisation, Michael Millette, analyses the changing face of cat bond investors...
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Karen Clark, of the eponymous firm, is a leading expert in catastrophe risk assessment and management, working for more than 25 years in the field. Clark developed the first hurricane catastrophe model and founded the first catastrophe modelling company, Applied Insurance Research (AIR), in 1987. She shares her thoughts on the 2010 hurricane forecasts...
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Despite talk of resilience and risk picking in the Sunshine State, the dynamics of a traditional property casualty reinsurance market full of surplus capacity held sway at the key 1.6 Florida renewal.
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The key US cat renewal date of 1 June this year - which was characterised by excess traditional capacity and falling rates - served to underline the steady presence of collateralised reinsurance in the property cat market.
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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.
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Trading of 2010 catastrophe derivatives on the Chicago Mercantile Exchange (CME) and Chicago Climate Futures Exchange (CCFE) reached $44mn as the US wind season officially opened this month.
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After a challenging year for many of Florida's standalone homeowners' insurers, 1.6 renewals at least offered some comfort as the average cost of renewing programmes fell significantly against a backdrop of surplus capacity in the wider reinsurance industry.
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Ambitious plans to publicly float an evergreen reinsurance sidecar for the first time ran aground in early June as Catlin Group pulled the listing of Long Bay Re.
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A bumper May saw $1.55bn of US wind exposure hit the market through six cat bonds, in a last minute rush to place hurricane cover in the capital markets before the official start of the US storm season on 1 June.
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Market data
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Risk-picking and innovation key for traditional and non-traditional capacity to support troubled Sunshine State
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Cat bond placements are subject to a framework of strict rules and procedures that can confuse the uninitiated. Michael Madigan, a Sidley Austin partner and co-head of the firm's property and casualty alternative risk transfer practice, opens the door to the private placement club...
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In our regular ILW quarterly update, Willis Re executive director Henry Kingham sees capital markets capacity flooding the ILW market, but Chile halts the price decline...
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Longevity risk has threatened pension fund solvency in the UK for years and life reserves have been a drain on insurer's balance sheets due to US regulation. Can new capital market solutions be the elixir of life for pension funds and life insurers?
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Uncertainty around the economic cost of global warming is creating insurance-linked trading opportunities, say Pauline Barrieu and Leonard Smith.
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Strong 2009 performances and financial markets stabilisation have funnelled additional capacity into the convergence sector, with Axa and Q Re deploying new funds at the start of 2010.
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The price of US wind industry loss warranty (ILW) instruments has fallen by up to 40 percent year-on-year for the 1/1 renewal season, with average rates on line (RoL) reducing around 25 percent over the prior year across all perils.
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European (re)insurers face an average 70 percent increase in solvency capital requirements (SCR) from changes to implementation measures for the European regulatory standard proposed over the past six months.
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Dutch conglomerate ING has completed an $825mn Regulation XXX life transaction, backed by a new collateral facility from Bermudian firm Karson Management.
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Cat bond market conditions are expected to be "very favourable" in 2010, leading to around $5bn of new issuance, according to industry experts.
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A record $1.7bn ILS issuance in Q4 fuelled by 30-40 percent falls in cat bond pricing took total 2009 ILS issuance to $3.5bn in the form of 19 transactions (see table).
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Three deals closed in late December with a combined capacity of $875mn -demonstrating strong investor demand for the ILS product.
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Goldman Sachs Group has ceased to run its life settlement longevity index QxX due to poor take-up, Trading Risk can reveal.
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Reinsurers gave in to a controlled reduction of prices at the 1 January renewal, with prospects for any generalised upturn unlikely in 2010, according to leading reinsurance brokers' reports.
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Rating agency Standard & Poor's (S&P) has affirmed its A+ credit rating on RenaissanceRe affiliate and property catastrophe reinsurer DaVinci Re, with a stable outlook.
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Swiss Re has insured SFr1.7bn of longevity risks for the Royal County of Berkshire pension fund (RCBPF) in the first pure longevity risk transfer undertaken for any government body worldwide, according to the firm.
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Natural catastrophe activity remained near the levels of the previous two years in 2009, though in the absence of a significant fallout from a US hurricane this season insured losses were in the region of only $20bn, according to the latest research from Aon Benfield.
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The newly launched PERILS European windstorm industry loss index has been chosen as the trigger on two industry loss warranty (ILW) contracts.
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A loss looks increasingly likely on the Class G notes of Glacier Re's 2008 Nelson Re, as claims from last year's Hurricane Ike threaten to trigger the bond.
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Zurich American Insurance Company is believed to be closely monitoring the progress of Swiss Re's Redwood XI as a test case for its mooted Lakeside Re cat bond renewal, Trading Risk understands.
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Secondary market traders registered an uptick in cat bond trading in November, as the US wind season drew to a close and US wind-exposed bonds came off-risk.
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The secondary market price of 2009 cat bonds has shot up to an average 108-112 cents to the dollar, reflecting strong demand for the high yields in early post-Lehman issuance.
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Secondary market pricing on Glacier Re's troubled Nelson Re Class G notes slumped to around 7-10 cents to the dollar after Moody's Investor Service downgraded the $67.5mn US wind-exposed G tranche in late November on news of mounting losses from Hurricane Ike.
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The four cat bonds to close in recent weeks were all upsized, but investors' participation was still heavily marked down...
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As the year-end inches closer, the tally of ILS issuance has reached $2.5bn. And with a healthy pipeline of deals, total issuance for the year is set to exceed the $2.8bn of deals placed in 2008.
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Leading industry loss warranty (ILW) broker Aon Benfield has partnered exclusively with Trading Risk to provide insight and commentary on the ILW market. Aon Benfield comments on Q4 activity
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Eurex, the leading European derivatives exchange has reached agreement with the US Commodity Futures Trading Commission (CFTC) to actively offer its binary US hurricane derivatives in the States.
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Rating agency Moody's has formally withdrawn the debt ratings on Arch Capital’s property cat sidecar Flatiron Re, after its loans were repaid in full earlier this year. Moody's also withdrew Fl
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Moody’s Investors Service has maintained the ratings for Bank of Ireland’s 2007 life ILS Avondale Securities with a stable outlook, after concluding a review for possible downgrade. The a
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Reinsurance broker Guy Carpenter (GC) and its capital markets arm GC Securities noted that achieving $3-4bn total ILS issuance for 2009 will be “quite a stretch” but “attainableR
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Ratings agency Moody’s has downgraded the $750mn of notes in life (re)insurer Genworth Financial’s River Lake III XXX securitisation – assigning a developing outlook to the notes an
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The ILS market may be in line for its fabled $2-2.5bn new issuance in the latter months of 2009, as real deals begin to hit the market, Trading Risk understands. With more than $3bn of ILS capacity m
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Secondary trading accelerated towards the end of September, as ILS investors realigned their cat bond holdings in anticipation of $2.5bn of new issuance in the coming months. “Investors are tra
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The Bermuda Monetary Authority (BMA) has finalised its new regulatory regime for Special Purpose Insurers (SPIs) in a push to become the ILS jurisdiction of choice. On 5 October the BMA published a
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The twin impact of the financial markets turmoil and the recession are clear to see in first half figures for the US property and casualty industry, with both the top and bottom line heavily hit. Acc
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Swiss Re has extended its partnership with Oxfam America on introducing weather insurance for a staple cereal crop to a further four Ethiopian villages. The pilot project, in drought-prone Adi Ha, sa
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Ratings agency Moody’s Investors Service has further downgraded and withdrawn the ratings on Scottish Re-sponsored life securitisations due to dismal asset performance in the structures. In Sep
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Moody’s Investors Service has downgraded the underlying rating of approximately $721mn of UNUM Group’s Northwind life securitisation to Baa1 from A2, citing the “adverse impact of i
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Industry loss warranty (ILW) buyers are returning to the market after a very quiet trading season, seeking cheap stop-gap cover for the remainder of 2009, according to broker-dealers. Swiss Re's Patt
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Hedge fund participation in 2009 ILS transactions has increased more than four-fold since 2008, although their slice of the overall pie has shrunk by more than half since 2007, according to industry
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Perennial ILS issuer the California Earthquake Authority (CEA) has not renewed its $650mn specific cat bond layer with Swiss Re Capital Markets (SRCM) at its 2010 reinsurance renewal, Trading Risk ca
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Dan Ozizmir, convergence market rainmaker and former head of Swiss Re Capital Markets (SRCM), has joined the judging panel for the Trading Risk Awards 2010. The annual Awards, launched with great suc
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GC Securities has launched a New York-based ILS trading desk to complement its index trading activities and to boost cat bond liquidity. The desk, which gained full approval in June, will be run by
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The secondary market pricing of two cat bonds struck by the bankruptcy of total return swap (TRS) counterparty Lehman Brothers has increased by a third since mid-summer, after a rally in underlying c
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Former RBS executives Henry Kus and Bjorn Schmolck have launched dedicated ILS vehicle Traymar Capital Ltd and are understood to be in negotiation with potential capital providers to start a series o
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Deutsche Bank’s mooted Evergreen vehicle – which aims to transfer $1bn of (re)insurance risk to the capital markets – will target equity investors in a bid to create more liquidity
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Global life settlement (LS) representative bodies have hit back at recent press coverage that suggests the asset class is a new sub-prime scandal in waiting. A September New York Times article compar
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The Bermuda Monetary Authority (BMA) has finalised its new regulatory regime for Special Purpose Insurers (SPIs) in a push to become the ILS jurisdiction of choice. The BMA yesterday (5 October) pub
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Convergence market rainmaker and former head of Swiss Re Capital Markets (SRCM), Dan Ozizmir, has joined the judging panel for the Trading Risk Awards 2010. The annual Awards, launched with great suc
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Moody's ratings agency is keeping a $67.5mn tranche of the Nelson Re cat bond, from Swiss reinsurer Glacier Re, under review for possible downgrade. The agency said that the action relates to Nelson
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ILS giant Swiss Re has launched a three-year $250mn Mexican wind and earthquake cat bond, as first predicted by Trading Risk. The bond is believed to be a renewal of Swiss Re’s $160mn CatMex tr
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The longevity swap market is “poised to grow” to £5-10bn in several years, after the latest £1.9bn transaction between UK insurer RSA and Goldman Sachs took the value of longevity reserve
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The index-based hurricane risk hedge transacted between US utility firm NRG Energy and insurance broker Willis in early September underlines the energy sector’s potential in the development of
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Interdealer Tradition Re is partnering with Lloyd’s broker Alwen Hough Johnson (AHJ) to access the Lloyd’s and London markets for specialised retro products, including industry loss warra
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The insurance-linked securities (ILS) sector produced returns of 3.89 percent for the year to end-June 2009, down from 10.12 percent the previous year, according to Aon Benfield cat bond indices. In
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The influential International Association of Insurance Supervisors (IAIS) is producing common standards and guidance relating to the supervision of (re)insurance risk transfer to the capital markets.
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A further surge in recession-related credit losses has prompted Standard & Poor’s (S&P) to downgrade the notes of Crystal Credit – Swiss Re’s EUR252mn credit reinsurance securitisat
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Ratings agency Moody’s Investors Service has upgraded two tranches of notes on Brit Insurance’s 2007 cat swap deal, Fremantle Ltd, as the likelihood of a loss diminishes while the transac
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Moody's Investors Service is keeping a $67.5mn tranche of the 2008 Nelson Re cat bond from private equity-backed Swiss reinsurer Glacier Re under review for possible downgrade. The agency said that t
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Swiss Re is close to launching a fourth extreme mortality bond in its Vita series, spurred by a deepening of the H1N1 swine flu pandemic, Trading Risk understands. Although the target size of Vita IV
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Leading ILS investor Clariden Leu is seeking to use the securitisation power of its Swiss bank franchise to transform insurance risk into much-needed investments for its flagship Cat Bond Fund. The $
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The picture emerging from the Monte Carlo Rendez-Vous this September was of a healthy but fragmented reinsurance market, with adequate capacity dampening expectations of rating improvements in 2010.
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Bermudian mutual insurer Oil Casualty Insurance Co (OCIL) has repurchased $7,012,000 of the Class B notes of Avalon Re – its loss-stricken 2005 excess liability cat bond. The tender offer to no
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London-based ILS investment manager Securis Investment Partners has hired former Swiss Re trader Al Selius to start a New York office. Selius will be based in New York and will join the non-life orig
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Secondary cat bond pricing has risen for the tenth consecutive week, according to Swiss Re, but Hannover Re still cited “attractive pricing” as a reason for repurchasing EUR30mn of its Me
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Disappointing trading volumes in the brave new world of insurance-linked derivatives have pushed the world’s largest interdealer broker ICAP plc and insurance intermediary JLT to close their jo
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Deutsche Bank is developing a highly liquid, highly transparent insurance-linked instrument which would provide mainstream investors with an alternative to cat bonds, Trading Risk understands. The ta
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Hannover Re has continued its pioneering legacy with the launch of the $60mn sidecar-style vehicle Fac Pool Re – the first dedicated, securitised facility created for facultative exposures. Han
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London-based ILS investment manager Securis Investment Partners has hired former Swiss Re trader Al Selius to start a New York office, Trading Risk can reveal. Selius will be based in New York and wi
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Bermudian mutual insurer Oil Casualty Insurance Co (OCIL) has repurchased $7,012,000 of the Class B notes of Avalon Re – its loss-stricken 2005 excess liability cat bond. The tender offer to n
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Hannover Re has successfully repurchased a third of Merlin – its EUR95mn 2007 reinsurance recoverable securitisation – in the secondary market, Trading Risk can reveal. The German reinsu
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Pricing for 2009 cat bonds has fallen by 15 percent in the secondary market in recent months, opening the way for non-US peril issuance towards year-end, according to Swiss Re. “Cat bond sprea
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The energy sector’s growing demand for “Quanto” weather derivatives – which provide a hedge for weather and energy-linked risk – will spur rapid growth in the weather de
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The longevity swap market is “poised to grow” to £5-10bn in several years, after the latest £1.9bn transaction between UK insurer RSA and Goldman Sachs took the value of longevity reserve
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Interdealer broker Tradition Re is partnering with Lloyd’s broker Alwen Hough Johnson (AHJ) to access the Lloyd’s and London markets for specialised retro products, including industry los
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Scor has added a new lower layer of protection to its four-year mortality swap transaction with JP Morgan, which would give the French reinsurer additional protection in the event of a major pandemic
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Oil Casualty Insurance Co (OCIL) has extended to 4 September the deadline for its tender offer to repurchase up to $50mn of the Class B notes on its Avalon Re cat bond, Trading Risk can reveal. In Au
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Continued price pressure and increasing capacity in the traditional reinsurance market “could lead to a soft market for some time to come”, according to industry leaders – signallin
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The world's largest interdealer-broker, ICAP plc, and insurance intermediary JLT have closed ICAP-JLT Ltd – their insurance-linked derivatives joint venture – as part of a restructuring w
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Ratings agency Moody’s Investors Service has upgraded two tranches of notes on Brit Insurance’s 2007 cat swap deal, Fremantle Ltd, as the likelihood of a loss diminishes while the transac
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Hannover Re has launched its $60mn sidecar-style vehicle, Fac Pool Re – the first dedicated, securitised facility created for facultative exposures. Hannover Re expects to cede approximately 60
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The influential International Association of Insurance Supervisors (IAIS) is producing common standards and guidance relating to the supervision of (re)insurance risk transfer to the capital markets.
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A further surge in recession-related credit losses has prompted Standard & Poor’s (S&P) to downgrade the notes of Swiss Re’s EUR252mn credit reinsurance securitisation, Crystal Credit, fo
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Hurricane Bill strengthened to a Category 4 storm this morning, with wind speeds of up to 135 mph, to reach a CME Hurricane Index (CHI) value of 12.7, according to broker-dealer Tradition Re’s
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Cat derivative trading remained quiet yesterday, as the first hurricane of the 2009 US wind season strengthened to Category 2 in the mid-Atlantic and set course for Bermuda and the east coast of the
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The cat bond market is braced for a busy year-end as the market is still “on track” for an estimated $3-4bn of new ILS issuance in 2009, according to market sources. With $1.8bn of cat bo
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The C tranche of State Farm’s 2007 Merna Re transaction and the Swiss Re-sponsored Vega Capital’s class A and B notes have been upgraded by Moody’s Investors Service and Standard
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The North Atlantic wind season is predicted to produce ten tropical storms, of which four will strengthen to hurricanes, according to the Colorado State University storm research team. In August the
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A seepage of asbestos claims into Oil Casualty Insurance Ltd (OCIL)’s loss-stricken excess liability cat bond, Avalon Re, has thrown into question the valuation of its August tender offer to re
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Outstanding cat bond capacity declined again in the second quarter by $779mn to $11.2bn, as the value of maturing bonds outstripped new issuances. This marked the second consecutive quarter in which
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As predicted in July, Standard & Poor’s (S&P) lowered its ratings on four tranches of USAA’s Residential Reinsurance 2007, upon receipt of the annual reset reports from AIR Worldwide. In
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Swiss Re fell back into the red for the second quarter, as worse-than-expected mark-to-market losses and writedowns returned to haunt the reinsurer. Meanwhile, Hannover Re and Munich Re fared well in
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Moody’s Investors Service has maintained the ratings for Bank of Ireland’s 2007 life ILS Avondale Securities on review for possible downgrade. Moody’s said it’s review of the
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Insured losses from natural catastrophes were an above average $11bn for the first half of the year, according to Munich Re. Between January and June 2009, there were 380 natural catastrophes worldwi
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The received wisdom is that 2009 insurance-linked securities (ILS) issuance has been held back by the mismatch between capacity in the alternative and traditional reinsurance markets. It is difficul
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IFEX has added to its suite of event-linked futures (ELF), listing Eastern seaboard and North East US tropical wind contracts on the Chicago Climate Futures Exchange (CCFE). IFEX – which trades
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Risk Management Solutions (RMS) estimates a reduction of up to 35 percent in insured loss estimates for Californian earthquake, following a revision of its North American earthquake model this month.
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The two cat bonds to come to market in July both increased in size significantly during the marketing phase, evincing a strong demand from investors for new ILS issuance. North Carolina’s state
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An estimated $2-2.5bn of cat bond capacity has been traded in the secondary market to date in 2009 – outstripping the $1.8bn of new issuance of insurance-linked securities (ILS) by 40 percent.
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Swiss insurer Zurich Financial Services (ZFS) has confirmed receipt of $128.5mn in paid claims from its $190mn KAMP Re cat bond, sparking a flurry of trading interest in the distressed notes. Pricin
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Electronic weather trading platform Weather Risk Solutions (WRS) has fully launched a series of hurricane commodity call options, allowing traders to hedge the risk of a landfalling hurricane in 78 U
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In an extract from the report – the firm’s European head of capital markets Des Potter discusses the pros and cons of non-US peril transactions. US wind is the largest global peril in the
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Reinsurer SCOR has settled its long-running dispute with Highfields Capital Management, the former main minority shareholder in its 2001 sidecar vehicle Irish Reinsurance Partners (IRP) Holdings Limi
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Oil Casualty Insurance Co (OCIL) has launched a dutch auction to repurchase up to $50mn of the outstanding $135mn Class B notes on its 2005 excess liability cat bond Avalon Re, for up to $42.5mn. The
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IFEX has added to its suite of event-linked futures, listing Eastern seaboard and North East US tropical wind contracts on the Chicago Climate Futures Exchange (CCFE). IFEX – which trades indus
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Hannover Re’s latest catastrophe bond, Eurus II, closed yesterday (29 July), providing the reinsurer with EUR150mn of European windstorm cover and taking overall 2009 cat bond issuance to $1.8b
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Parkton Re Ltd, the cat bond put together for North Carolina’s state wind pool, has become the latest 2009 issue to upsize as it increased from a planned $125mn to $200mn on closing. The transa
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Notwithstanding an active 2009 catastrophe season, the spreads on insurance-linked securities (ILS) are likely to tighten later this year, in what is typically an active time for issuance. Accord
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US law firm Cozen O’Connor has flagged its interest in the trading risk universe by launching a capital markets group with expertise in insurance-linked securities (ILS). The group will advise
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Senior convergence industry experts have contributed to a comprehensive teaching and reference guide to the sector – The Handbook of Insurance-Linked Securities (ILS) – published this mon
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Ratings agency Moody’s Investor Service has withdrawn its ratings on the notes and loans of Hannover Re’s 2008 hybrid sidecar vehicle – the $133mn Globe Re – on repayment of t
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Changes in the accounting treatment of insurance-linked securities and derivatives are set to boost the convergence sector, as the European directive Solvency II recognises the instruments as “
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Hannover Re’s European windstorm catastrophe bond, Eurus II, upsized today to EUR150mn, with indicative pricing in the low end of the range at EURIBOR plus 675 basis points. Pricing is expected
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North Carolina’s state-backed catastrophe insurance plans, the Joint Underwriting Association and the North Carolina Insurance Underwriting Association, (NCJUA/IUA), have securitised $125mn of
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Ratings agency Standard & Poor’s (S&P) has downgraded six cat bonds and placed a further four on CreditWatch with negative implications in a move which stems from a hardening of its rating crit
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Convergence pioneer Nephila Capital raised an additional $800mn in the second quarter of this year for its insurance-linked investment funds, evincing a strong demand for non-correlated assets. Nephi
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Hannover Re’s proposed EUR75mn European windstorm catastrophe bond, Eurus II, will incorporate BNP Paribas’ (BNPP) repurchase agreement (repo) collateral structure. As reported by Trading
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The lack of US windstorm activity so far is continuing to weigh on the pricing of industry loss warranties (ILW) and insurance-linked derivatives while volumes remain modest. Matthew Carter – v
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A $100 investment in insurance-linked securities (ILS) in 2002 would be worth $171 today, according to a report from broker dealer Lane Financial, with the firm’s cat bond return index showing
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Former Magnetar Capital portfolio manager Pete Vloedman is launching his own insurance-linked investment vehicle, Anchor Risk Advisors LLC, Trading Risk can reveal. Vloedman left alternative asset ma
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Cat bond pricing is likely to face more downward pressure after reinsurance rate increases were kept subdued at the key 1 July renewal date by adequate traditional capacity. US catastrophe rates for
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New Castle and CIG Re head Chris McKeown joined global reinsurance broker Guy Carpenter in July as CEO of the firm’s global analytical and specialty practices, Trading Risk understands. McKeown
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The reinsurance and risk-linked investments team (RLI) at alternative asset manager Stark Investments is spinning out of the mothership in a management buy-out, led by portfolio managers Tony Rettino
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Tony Ursano – CEO of Willis capital markets and advisory – has hired seven former colleagues from Banc of America (BofA) Securities to boost the new group. Former co-head of equity capita
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Ratings agency Standard & Poor’s (S&P) has downgraded six cat bonds and placed a further four on CreditWatch with negative implications in a move which stems from a hardening of its rating crit
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Hannover Re’s upcoming Eurus II European windstorm catastrophe bond, which has an indicative size of EUR75mn and is currently being roadshowed to investors, will incorporate an innovative colla
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North Carolina’s state-backed catastrophe insurance plans, the Joint Underwriting Association and the North Carolina Insurance Underwriting Association, (NCJUA/IUA), have securitised $125mn of
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New Castle and CIG Re head Chris McKeown joined global reinsurance broker Guy Carpenter today (1 July) as CEO of the firm’s global analytical and specialty practices, Trading Risk understands.
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Changes in the accounting treatment of insurance-linked securities and derivatives are set to boost the convergence sector, as the European directive Solvency II recognises the instruments as “
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Cat bond managers GC Securities and Deutsche Bank won the Non-life transaction of the year category at last night’s Trading Risk awards, beating Goldman Sachs for Topiary Capital, SCOR for Atla
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Convergence market luminaries gathered in London last night to celebrate and reward the skill, innovation, dynamism and vision so evident in this sector at the inaugural Trading Risk awards. The winn
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Goldman Sachs partner Michael J. Millette was heralded as the Outstanding Contributor of the year at the inaugural Trading Risk awards dinner last night in London. Telling the audience of convergenc
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Tony Ursano – CEO of Willis capital markets and advisory – has hired seven former colleagues from Banc of America (BofA) Securities to boost the new group. Former co-head of equity capita
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Global broker Aon Benfield has suspended its fundraising efforts for Aon’s investment management firm Global Insurance Strategies LLC (GIS), as it concentrates on Benfield-backed cat fund manag
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Swiss Re and Guy Carpenter are bringing a $100-150mn cat bond to market on behalf of the North Carolina Joint Underwriting Association (NCJUA), in order to fill gaps left in its 1 June reinsurance pr
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The ILS market is braced for upcoming changes to California earthquake models that may reduce the estimated hazard resulting from a temblor by up to 35 percent. Upcoming releases from the two main p
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CCRIF into 3rd year with 10 percent rate cut Reinsurance broker Aon Benfield has confirmed that all 16 Caribbean member governments have renewed their catastrophe policies with the World Bank-sponso
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More than $1.7bn of sidecar capacity was secured by reinsurers looking to cash in on attractive underwriting conditions and potential capacity shortages in the first half of 2009, despite “diff
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Nephila Capital has secured a new $35mn investment mandate from specialist fund manager AMP Capital Investors, further widening the audience for trading (re)insurance risk in the mainstream capital m
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Eurex, the leading European derivative exchange and clearing house, is to launch binary US hurricane derivatives on 29 June, complementing current over-the-counter (OTC) trades. The exchange –
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June has seen the first signs of easing in the sky-high prices that have all but frozen the industry loss warranties (ILW) market in 2009. However, ILW pricing may have to fall a further 10-15 percen
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ISDA OTC template launched After two years of market consultation, the International Swaps and Derivatives Association (ISDA) has launched a standard template for trading US wind event futures. ISDA
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With $1.385bn of US wind and quake peril securitised to date in 2009, and another $100-150mn in the pipeline (see p1) insurance-linked securities (ILS) investors called for peril diversification as t
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A clear pipeline for new cat bond issuance in early June proved a fillip for secondary trading, with volumes and pricing increasing on US and non-US peril bonds. “In the first ten days of June
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Forecasting hurricane activity is rarely accurate, and should therefore not be relied on for making investment decisions in the sector, according to analysis from Numis Securities. Numis added that
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Insurance-linked securities (ILS) sponsor USAA – which issued its thirteenth consecutive cat bond last month – has set a new disclosure standard for (re)insurers by posting data on all of
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Cat risk appetite showed signs of reappearing from the hedge fund community, as two alternative investment specialists unveiled forays into insurance-linked investments this month. Cartesian Capital
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Dan Ozizmir has become the most high profile casualty of Swiss Re’s ongoing overhaul of its insurance linked securities (ILS) operations, Trading Risk can reveal. The head of the reinsurer
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The mysterious US investment fund which owns the outstanding positions in Aspen Insurance’s beleaguered cat bond, Ajax Re, is tussling with the administrators of the Lehman Brother’s bank
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Traditional US reinsurance markets have recently shown significant capacity constraints, driving reinsurance rates upward and supporting catastrophe bond pricing at high levels. Reinsurance rates for
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Oil and gas liability mutual Oil Casualty Insurance Ltd (OCIL)’s 2005 excess liability cat bond Avalon Re has once again extended the maturity date on its Class B and Class C notes to 9 Septemb
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Standard & Poor’s (S&P) has cited Hannover Re’s retro strategy as a factor in deciding to downgrade the outlook to negative on the reinsurer’s AA- credit and insurer financial stren
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Dan Ozizmir has become the most high profile casualty of Swiss Re’s ongoing overhaul of its insurance-linked securities (ILS) operations, Trading Risk can reveal. The head of the reinsurer
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Eurex, the leading European derivative exchange and clearing house, is to launch binary US hurricane derivatives on 29 June, complementing current over-the-counter (OTC) trades. The exchange –
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The World Health Organization (WHO) has declared a global swine flu pandemic after calling an emergency meeting with its committee of flu experts. A pandemic occurs after isolated animal-human trans
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Private equity firm Cartesian Capital Group has created a Bermudian Class 3 insurer – Iris Reinsurance Ltd – expected to offer an estimated $100mn in industry loss warranties (ILW) capaci
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Nephila Capital has secured a new $35mn investment mandate from specialist fund manager AMP Capital Investors, further widening the audience for trading (re)insurance risk in the mainstream capital m
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Swiss Re closed its third cat bond on behalf of ACE American Insurance Co – the $100mn US wind and quake transaction Calabash Re III Ltd – at the start of the US wind season on 1 June. Th
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Insurance-linked securities (ILS) investors have drawn a line in the sand on pricing of non-US peak peril cat bonds, committing only 50 percent of the original EUR100mn capital sought for Munich Re
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Bermudian reinsurer RenaissanceRe has relaunched its defunct Timicuan Re sidecar with $10mn seed capacity and $50mn of third party equity investment, despite difficult market conditions for the vehic
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Military mutual insurer and insurance-linked securities (ILS) stalwart USAA’s 13th consecutive cat bond, Residential Re 2009, has closed after upsizing again to $250mn. Res Re 2009 started lif
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Global broker Aon Benfield has suspended its fundraising efforts for new investment management firm Global Insurance Strategies LLC (GIS), as it concentrates on Benfield-backed cat fund manager Junip
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Bermudian energy industry mutual Oil Casualty Insurance Ltd (OCIL) has denied there is any dispute over asbestos-related claims on its 2005 excess liability cat bond Avalon Re. “No asbestos-re
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Catastrophe futures pricing has softened up to 10 percent for US wind contracts in recent weeks, as traders seek to deploy capital ahead of the North Atlantic hurricane season which starts on 1 June,
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Swiss Re is launching a third cat bond on behalf of ACE American Insurance Co – the $100mn US wind and quake transaction Calabash Re III Ltd – just in time for the start of the US wind se
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Goldman Sachs, bookrunner and lead manager on USAA’s thirteenth cat bond – Residential Re 2009 – has confirmed pricing on the further upsized $250mn transaction. Goldman Sachs, whic
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After two years of market consultation, the International Swaps and Derivatives Association (ISDA) has launched a standard template for trading US wind event futures. ISDA – the global trade as
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HSBC bank has hired ex-Morgan Stanley executive Simon Hotchin to head its insurance solutions group, which recently acted as arranger of the collateral management mechanism for Allianz’s Blue F
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The recent outbreak of swine flu poses little immediate threat to the sector’s three extreme mortality cat bonds, despite the global death toll reaching 74. The World Health Organisation (WHO)
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S&P has lowered its senior debt rating on Scottish Re’s life transaction Orkney Re II’s series A-2 notes to CC from CCC, citing declining mark-to-market asset values and doubts over the v
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ILS investors are so keen to diversify their holdings with non-catastrophe exposures that they may be willing to trade yield for greater choice. Speaking at the S&P European ILS conference on the 13
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Swiss Re has confirmed that it will cease carbon trading and close its emissions trading desk, in a move first revealed by Trading Risk. The reinsurance giant is understood to also be moving its natu
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S&P has withdrawn its ratings on Arch Reinsurance’s $256mn credit facility Flatiron, Hannover Re’s $200mn sidecar, Kepler Re, and Harbor Point’s $125mn vehicle Bay Point, while Mood
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Credit Suisse Asset Management (CSAM) is set to launch a $65mn dedicated life insurance linked securities (ILS) fund, demonstrating the resurgent popularity of life risk trading. The fund – cal
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Military mutual insurer and insurance-linked securities (ILS) stalwart USAA has increased the size of its thirteenth consecutive cat bond, Residential Re 2009, by $90mn – to $240mn – Trad
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Despite mutterings of discontent in some corners of the investor community on loss-stricken liability cat bond Avalon Re, secondary market pricing still reflects only an anticipated partial loss on t
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The renewal of Hannover Re’s hybrid sidecar vehicle - $133mn Globe Re – has been stalled by a “huge gap” between pricing in the traditional and capital markets, Trading Risk c
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US military mutual insurer and ILS stalwart USAA has increased the size of its thirteenth consecutive cat bond, Residential Re 2009, by $90mn - to $240mn - Trading Risk can reveal. Goldman Sachs, whi
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Secondary market pricing on two Ike-exposed cat bonds - Allianz’s $120mn Blue Coast and Glacier Re’s Nelson Re Class G notes - fell by an average 12 percent in the first quarter of 2009,
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We are enormously proud of both the high calibre and the quantity of entries we received for the inaugural Trading Risk Awards 2009. The level and quality is exceptionally high and choosing the short
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A second Lehman Brothers-backed catastrophe bond is in default after issuer Ajax Re failed to repay the principal at the 8 May redemption date, according to AM Best which downgraded and withdrew its
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A surge in recession-related credit losses has “increased the default possibility” of Swiss Re’s $252mn credit reinsurance securitisation, Crystal Credit, prompting Standard & Poor
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AM Best has taken rating actions on various tranches of Merrill Lynch’s innovative 2007 collateralised debt obligation (CDO) issue, Dekania. Dekania allowed smaller US and European carriers, in
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Munich Re and Tokio Marine Nichido Fire’s private cat swap based on Risk Management Solutions’ (RMS) Paradex-Europe Windstorm (PEW) index takes the total notional amount of risk transferr
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German reinsurance giant Munich Re has launched a EUR100mn European windstorm and Turkish earthquake cat bond – Ianus – which will be welcomed by those calling for peril diversification i
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ILS investors were warned last week that they need to be more realistic on yields if they wish to see more cat bonds emerge from (re)insurers. Although catastrophe reinsurance rates are continuing to
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Industry loss warranty (ILW) and catastrophe derivatives trading volumes are “considerably” lower than last year, stifled by high prices and the effects of contagion from the financial ma
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Insurance-linked derivatives provide the best security of a range of traditional and alternative risk transfer products, according to Michael Jedraszak, underwriter at Bermuda-headquartered (re)insur
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Will investor demand for long-tail macro longevity risk be sufficient to meet the anticipated supply from corporate pension funds in the wake of Babcock International Group’s planned £750mn lon
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Trading Risk has partnered with Swiss Re to publish its proprietary cat bond index on a regular basis. Look out for regular data and commentary on ILS performance in our newsletters and on our websit
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PERILS AG, established this year to aggregate and provide industry-wide European catastrophe insurance data, has estimated property insurance market losses caused by windstorm Klaus of EUR1.55bn. The
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Despite cat reinsurance rates continuing to harden, several proposed sidecar vehicles looking to cash in on attractive underwriting conditions and potential capacity shortages are stalling as the key
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Leading ILS investor Nephila Capital and a subsidiary of Allianz Risk Transfer (ART) have tapped two investors for an extra $200mn to deploy during the 2009 US wind season. The two ILS-specialist fir
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UK-based engineering support services firm Babcock International Group plc is structuring a £500mn longevity swap with Credit Suisse – the first in a series of transactions aimed at hedging 45
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AM Best has downgraded and withdrawn its debt rating on Aspen Re’s $100mn earthquake cat bond Ajax Re, after it failed to make the full payment on the outstanding principal amount of the notes
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Newly founded Perils AG – the Zurich-based company set up to establish a European industry-wide loss index – estimates the property insurance market loss for windstorm Klaus at EUR1.55bn.
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Industry loss warranty (ILW) and catastrophe derivatives trading volumes are “considerably” lower than last year, stifled by high prices and the effects of contagion from the financial ma
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German reinsurance giant Munich Re has launched a EUR100mn European windstorm and Turkish earthquake cat bond – Ianus – which will be welcomed by those calling for peril diversification i
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Military mutual insurer and insurance-linked securities (ILS) stalwart USAA is currently marketing its thirteenth consecutive cat bond – the $150mn Residential Re 2009 – Trading Risk can
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Insurance-linked securities (ILS) pioneer Swiss Re has returned to the cat bond market with a $60mn US wind and quake cat bond – Successor II – after almost a year of inactivity in the is
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Insurance linked securities (ILS) demonstrated a more than 60 percent long-term correlation to the S&P500 index in the aftermath of the Lehman Brothers collapse last year, despite the sector purporti
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Niche US property insurer Assurant Inc has successfully launched its first cat bond – the $150mn US wind bond Ibis Re Ltd Series 2009-1 – Trading Risk can reveal. Cayman Islands-registere
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IFEX traded 3,600 lots of US wind event-linked futures on the Chicago Climate Futures Exchange (CCFE) in one day last week, as trading accelerates prior to the 1 June North Atlantic storm season. The
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Munich Re and Tokio Marine Nichido Fire have closed a private cat swap based on Risk Management Solutions’ (RMS) Paradex-Europe Windstorm (PEW) index, taking the total notional amount of risk t
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Newly established European catastrophe information aggregator Perils has appointed Dr Luzi Hitz as CEO. Hitz joins from Glacier Group, where he was head of international property and casualty treaty.
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Swiss Re will close its emissions trading desk and move its natural catastrophe insurance linked securities (ILS) under the control of its traditional underwriting function as it continues to pare ba
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German insurance giant Allianz’s Blue Fin II cat bond – which increased in size to $180mn last week – was over-subscribed at its close yesterday (14 April). The US wind and quake bo
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BB-rated cat bonds posted a 1 percent gain in the first quarter of 2009, recovering from a 1 percent loss in the final quarter of last year. The first quarter gain occurred as high yield bonds
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The Chicago Mercantile Exchange (CME) has acquired the Carvill Hurricane Index from the erstwhile broker, renamed it CME Hurricane Index (CHI) and appointed risk modeller EQECAT as calculation agent
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Allianz’s 2008 Blue Coast cat bond has been placed on negative watch due to fears that hurricanes Ike and Gustav will trigger a loss on it. If the bond were to suffer a loss it would be the six
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An anticipated $3bn in insurance linked securities (ILS) issuance for 2009 will not provide much-needed net growth to the market, but will only replace capacity from maturing deals, according to indu
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Nephila-backed weather risk service WeatherBill has launched a screen-based underwriting and trading platform. The WeatherBill White Label platform enables any third party to offer weather coverage t
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Temporarily distracted by tempting returns in other asset classes, multi-strategy investors consider insurance-linked securities (ILS) as a solid diversifying asset and demonstrate a high tolerance o
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Investors in the $33.5mn class G notes of closed sidecar Puma Capital are still vulnerable to losses from Hurricane Ike, despite the vehicle ceasing to write new business in April of last year. The $
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The ILS sector is maturing and now offers sufficient breadth and depth – through sidecars, catastrophe bonds, insurance-linked derivatives and other products – to provide real risk transf
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Nephila-backed weather risk service WeatherBill has launched a screen-based underwriting and trading platform. The WeatherBill White Label platform enables any third party to offer weather coverage t
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Dedicated insurance-linked derivatives broker Myrias LLC is developing a screen-based trading platform, aimed at standardising the trading of industry loss warranties (ILW) and cat bonds in the secon
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The latest cat bond to hit the market – Allianz’s upsized $180mn Blue Fin II – has eschewed the traditional total return swap (TRS) structure to invest collateral in notes issued b
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Bermudian insurance-linked investment manager Pentelia Capital Management has tapped the Japanese investor market to raise $132mn for a new dedicated cat fund – Eolia Diamond Ltd. Pentelia R
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A dislocation in pricing between cat bonds and the traditional reinsurance market may dampen the appetite of potential new ILS sponsors in 2009, according to Ming Lee, president and CEO of modelling
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The secondary market for insurance-linked securities (ILS) has seen disproportionate trading in short-dated cat bonds as investors strive to hold liquid positions. During brisk trading in the fourth
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Niche US property insurer Assurant Inc is launching its first insurance-linked security (ILS) – the $150mn US wind cat bond Ibis Re – which is expected to close later this month. Cayman I
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Texan lawmakers are weighing up a raft of proposed legislation that could overhaul the state’s loss-struck wind pool – triggering an increased reinsurance spend – or even establish
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The Caribbean Catastrophe Risk Insurance Facility (CCRIF) – the multi-country catastrophe risk pool backed by the World Bank – has had its reserves boosted by a EUR12.5mn donation from th
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The three remaining cat bonds affected by the collapse of Lehman Brothers have met their March interest payments. However, a default risk remains on troubled Ajax Re, Standard & Poor’s (S&P) sa
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UK insurance giant Aviva closed a £475mn longevity derivative transaction with a group of investors led by Bermuda-based PartnerRe, in a specially-tailored deal that opened the life insurance market
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A hardening market at 1 April – fuelled by reinsurer capital constraints and the ever-present Florida question – has caused insurers to enter the market early for 1/6 and 1/7 renewals, i
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Juniperus Capital Limited (JCL) chief executive Michael Cash has left the Aon Benfield-backed investment firm just nine months after its launch, prompting a management reshuffle. Executive chairman P
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German insurance giant Allianz’s Blue Fin II cat bond has increased in size – to $180mn from an original $150mn – the second deal to upsize on the back of strong investor demand thi
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Bermudian insurance-linked investment manager Pentelia Capital Management has tapped the Japanese investor market to raise $132mn for a new dedicated cat fund – Eolia Diamond Ltd. Pentelia - wh
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Juniperus Capital Limited (JCL) chief executive Michael Cash has left the Aon Benfield-backed investment firm just nine months after its launch, prompting a management reshuffle. Executive chairman P
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Ratings agency Standard & Poor’s (S&P) has placed the entire $120mn of notes on Allianz’s 2008 Blue Coast cat bond on negative watch, due to fears that hurricanes Ike and Gustav will tr
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Aon Benfield and Goldman Sachs have teamed up to manage a $150mn US wind and quake cat bond for Europe’s largest insurer Allianz, Trading Risk can reveal. The notes – Blue Fin II –
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Willis Group has appointed Tony Ursano, the former vice chairman of Banc of America Securities’ financial institutions arm, to become CEO of Willis Capital Markets and Advisory Services. The
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The Chicago Mercantile Exchange (CME) has facilitated a $10mn trade on its new 2nd event Gulf and Florida hurricane futures contract just days after its launch. The trade, which closed on 18 March
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The cat bond market is expecting $3bn of new issuance in 2009, despite a pricing “divergence” between insurance-linked securities (ILS) and traditional reinsurance that is making ILS look
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Insurance-linked investment fund Clariden Leu closed its specialist industry loss warranty (ILW) fund on Monday (16 March) at $30mn – short of its $50mn+ target – further evincing the tou
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Aspen Insurance’s $100mn 2007 earthquake cat bond Ajax Re is still at risk of default despite making its latest interest payment on time yesterday (16 March), according to Standard & Poor’
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The Chicago Mercantile Exchange (CME) has launched a new 2nd event Gulf and Florida hurricane futures contract for trading ahead of the 2009 US wind season, which begins on 1 June. The contract
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The closure of SCOR’s $200mn Atlas V cat bond in February marked the end of an issuance drought, opening the pipeline for two more deals that closed in early March. Atlas V – which provi
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The lead managers on SCOR’s $200mn Atlas V cat bond noted a shift in investor attitudes during the six-month gestation of the first deal to close in 2009. Erik Manning, of structuring agent and
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Cat bond structurers are exploring alternative European jurisdictions for special purpose reinsurance vehicle (SPRV) incorporation, after the Irish regulator forced two re-writes of the Atlas V trans
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PERILS – the Swiss firm established to develop the much-anticipated European industry loss index – is targeting medium-sized and regional insurers in order to gather sufficient market dat
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Berkshire Hathaway’s (BH) appetite for catastrophe reinsurance has been blunted and the company will sell less in 2009 in order to protect its capital cushion, according to chairman Warren Buff
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Ratings agencies Standard & Poor’s (S&P), AM Best and Moody’s have trimmed the ratings of troubled reinsurance giant Swiss Re on the back of its abysmal 2008 results. AM Best downgraded S
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Ratings agency Standard & Poor’s (S&P) has posted a negative outlook on State Farm and RenRe’s $100mn joint venture sidecar-style transaction Top Layer Re, on the back of a recent action
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As the cat bond market re-opens following a six-month hiatus, ratings agency Fitch has praised recent changes in cat bond investment guidelines and swap counterparty structures as “positive
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Moody’s Investors Service has put $67.5mn of the notes on Glacier Re’s $180mn Nelson Re cat bond on review for a possible downgrade after the (re)insurer significantly upped its Hurricane
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Ratings agency Standard & Poor’s (S&P) has extended the maturity date of excess liability company Oil Casualty Insurance’s indemnity-triggered casualty cat bond, Avalon Re, by a further t
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Fitch Ratings has upgraded the class B notes of Fremantle – Brit Insurance’s three-year catastrophe swap deal – as the likelihood of a loss is diminishing with the risk period movin
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Standard & Poor’s (S&P) has withdrawn its ratings on three bank loans issued by Emerson Re – the $500mn all-debt sidecar vehicle set up by Citadel’s CIG Re and New Castle Re in 2007
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Global broker Aon Benfield has established a new investment management firm as part of its bid to launch a dedicated insurance-linked securities (ILS) fund, in what has been described as a “ver
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SCOR has updated the notional portfolios used to model the attachment and exhaustion points on its catastrophe bonds Atlas Re III and Atlas Re IV, in a reset which became effective on 9 February. Acc
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Hannover Re has finally closed its $200mn sidecar, Kepler Re, three months ahead of its scheduled maturity, after shelving the renewal of the vehicle earlier this year due to market conditions. Hanno
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(Re)insurance broker Willis Group has developed a parametric index for offshore Gulf of Mexico (GOM) energy exposures, which it hopes will help halt the shrinking of the pool of capacity for the peri
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Liberty Mutual has completed its third Mystic Re series cat bond – a $225mn US wind and quake transaction – taking 2009 insurance-linked securities (ILS) issuance to $575mn. The size of t
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Contingent capital, pre-event bond issuance and private reinsurance products are emerging as the favoured solutions for funding the Florida Hurricane Catastrophe Fund’s (FHCF) potential $21bn c
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The Class A notes of Ajax Re – Aspen Insurance’s $100mn 2007 earthquake cat bond – have been placed on CreditWatch negative by ratings agency Standard & Poor’s (S&P), as it aw
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US insurer Chubb completed its $150mn East Lane Re III Florida wind indemnity cat bond earlier this month, demonstrating that the insurance-linked securities (ILS) market is open once again. Goldman
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US insurer Chubb has completed its $150mn East Lane Re III Florida wind indemnity cat bond, demonstrating that the insurance linked securities (ILS) market is fully open once again. Goldman Sachs
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Liberty Mutual has increased the size of its new US wind and quake cat bond Mystic Re II 2009 to $225mn - from the original $200mn - in light of strong investor interest in the transaction. Pricing
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Moody’s Investors Service has put $67.5mn of the notes on Glacier Re’s $180mn Nelson Re cat bond on review for a possible downgrade after the (re)insurer significantly upped its Hurricane
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With Mystic Re II 2009-1 – which will provide Liberty Mutual with three year cover for US hurricane and earthquake exposures – the insurer has resumed its partnership with Goldman Sachs a
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The rating agency upgraded the $60mn class B notes to AA from BBB+ today (24 February), while also affirming the $60mn class A and $80mn class C notes. The $200mn transaction is triggered if four or
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Goldman Sachs is currently marketing the East Lane Re III Series 2009-1 Class A transaction, which is expected to close at the beginning of March and will provide Chubb with $150mn of indemnity cover
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The Lehman Brothers-induced ILS drought has finally ended with the completion of the $200mn Atlas V catastrophe bond. Atlas V finally closed today (19 February), providing the French reinsurance gro
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The much-anticipated European industry loss index has drawn closer to fruition with the Swiss incorporation of PERILS AG, a firm established to aggregate European windstorm exposure and loss data. As
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The devastating Windstorm Klaus – which swept across southern France and northern Spain on 23-24 January leaving a trail of destruction – could trigger cat bonds if the losses are as high
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The Irish Financial Regulator (IFR) initially declined to authorise the special purpose reinsurance vehicle (SPRV) Atlas V Re Ltd in February, in a show of teeth that delayed the issuance of the firs
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Swiss Re is probing all sectors of the trading risk universe in an attempt to hedge layers of the $1.55bn of exposure it assumed on the California Earthquake Authority (CEA) reinsurance programme in
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Japanese insurer Mitsui Sumitomo Insurance USA Inc is offering weather insurance policies in the US as a “simpler” alternative to derivatives for smaller companies. The firm will sell i
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Heavy fourth quarter 2008 secondary cat bond trading sent the insurance linked securities (ILS) market to only the second quarterly loss in its history, at 0.94 percent. The quarter’s loss
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Swiss Re's Jacques Aigrain stepped down as CEO as the firm's share price plumbed new depths in early February. Investors deserted the stock following a package of measures to shore up the reinsurer
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Insurance-linked capital markets could benefit as Florida looks to alternative capital providers as part of the solution to the state catastrophe fund’s $19bn capacity shortfall. Florida Hurr
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Property Claim Services (PCS) has raised its estimate for onshore insured losses from Hurricane Ike by a further $900mn to $11.5bn, but the figure continues to conflict with loss projections from wit
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Citadel’s CIG Re and New Castle Re’s 2007 $500mn all-debt sidecar vehicle, Emerson Re, has been terminated as the hedge fund significantly scaled back its presence in the (re)insurance ma
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Asset values in the collateral account of Hannover Re’s $133mn hybrid sidecar vehicle Globe Re have fallen, triggering a “new mark-to-market collateral arrangement”. Deutsche Bank
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The class B notes of Catlin-managed catastrophe collateralised debt obligation (CDO) Bay Haven have been upgraded to A by S&P as the bond nears maturity with no sign of loss. Ratings agency S&P upg
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The Chicago Mercantile Exchange, the largest weather derivatives exchange, has expanded its temperature-based weather products to Australia. The new listings, which will begin trading on 23 Februar
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Oil Casualty Insurance Company’s (OIL) 2005 $405mn Avalon Re bond has been extended a further nine months, to 3 September 2009, in order to fully assess the losses to the bond. The notes, whi
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Capital markets capacity providers will emerge as winners as traditional markets seek alternative sources of capital in the face of major 2008 balance sheet losses. With the 2008 results season now
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Convergence stalwart Hannover Re has successfully completed a EUR100mn embedded value life transaction, proving that the foundering life securitisation market still has a pulse. Hannover continued
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The recent downgrade of Allstate’s Willow Re and reset of Hannover Re’s Globe Re on the basis of collateral performance have heightened scrutiny on cat bond structures, raising the ques
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Distress in the financial markets in 2008 caused secondary trading volumes to outstrip primary issuance more than twofold as credit risk seeped into the sector and de-leveraging hedge funds were forc
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Industry Loss Warranty (ILW) rates are stabilising as retro buyers step back from the maelstrom of 2008 rate hikes and capacity shortages and the January 1 renewals. ICAP’s Rob Turner told Tr
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The Chicago Mercantile Exchange (CME) traded more than $30mn notional limit of its CHI hurricane cat futures in the first weeks of 2009, as reinsurance broker Carvill withdrew from the initiative wh
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IFEX traded 25 lots ($250,000) of its 1st event 2008 $10bn event-linked futures contracts in February, as traders closed out positions ahead of the revised industry loss estimates for 2008’s H
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Allstate-sponsored $250mn cat bond Willow Re paid only 91 percent of its latest interest payment, triggering ratings agencies Standard & Poor’s (S&P) and AM Best to downgrade the notes, citin
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The insurance-linked derivatives market is expected to operate on standard contract documents “within months”, allowing cat swaps, futures and options to be traded more transparently, eff
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French reinsurer SCOR’s Atlas V cat bond has been delayed, with pricing now expected to be finalised by the end of this week (13 February) and closure the following week, Trading Risk can revea
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Swiss Re’s share price fell to a 52 week low of SFr21.70 today (5 February) as investors and ratings agencies reacted to news of Swiss Re’s further SFr3bn capital injection from Berkshire
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Capital markets capacity providers will emerge as winners as traditional markets seek alternative sources of capital in the face of major 2008 balance sheet losses. With the 2008 results season now
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Allstate has notified investors that its $250mn Willow Re cat bond will default on its scheduled interest payment today (2 February), as it falls victim to the credit risk that seeped into the sector
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Standard & Poor’s (S&P) has issued preliminary ratings on the three tranches of SCOR’s Atlas V cat bond, the first cat bond in six months, which is expected to close on 5 February. S
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The devastating Windstorm Klaus – which swept across southern France and northern Spain on 23-24 January leaving a trail of destruction – could trigger cat bonds if the losses are as high
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The Chicago Mercantile Exchange (CME) has traded $30mn notional limit of its CHI hurricane cat futures in the first weeks of 2009, as reinsurance broker Carvill withdraws from the initiative which it
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The acquisition of New Castle Re renewal rights by start-up Torus Insurance Holdings (Bermuda) Ltd signals the continued withdrawal of Citadel Investment Group from the Bermudian reinsurance market a
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Convergence stalwart Hannover Re has successfully completed a EUR100mn embedded value life transaction, proving that the foundering life securitisation market still has a pulse. Hannover continued
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Hannover Re has postponed the renewal of its $200mn Kepler Re sidecar-style vehicle and is only “about 50 percent” placed on its slimmed-down Kaith Re K6 sidecar, as the credit crunch con
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The launch of retro investment vehicle Norton Re III has been delayed, evincing further strain on capacity in the retro market, Trading Risk can reveal. Dane Douetil, CEO of UK (re)insurer and lead
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Henry Kus, head of structured insurance products trading at RBS, and Douglas Elliott, managing director of insurance solutions at JPMorgan have left their respective firms, Trading Risk can reveal.
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Ratings agency Standard & Poor’s (S&P) further downgraded tranches of Scottish Re’s life securitisation Ballantyne Re as the vehicle failed to make its January interest payment to notehol
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Libero Ventures, the capital markets convergence firm formed in late 2007, has acquired the shareholding previously owned by Lehman Brothers from PricewaterhouseCoopers, the administrators of the fai
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Brit Insurance Holdings has decided to continue to sponsor Fremantle, its $200mn multi-peril cat bond, until maturity as the transaction faces potential exposure to losses from Hurricane Ike. Brit
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BNP Paribas and Deutsche Bank are marketing a $200mn US wind and quake cat bond for French reinsurer SCOR, Trading Risk can reveal. If successful, Atlas V – the first cat bond to be marketed
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Ratings agency Standard & Poor’s withdrew its ratings on $105mn of loans to XL Capital’s sidecar vehicle Cyrus Reinsurance II Ltd. The three loans were repaid in full, signalling the di
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Insurance-linked investment fund Clariden Leu is launching a $50-100mn specialist industry loss warranty (ILW) fund for 2009, Trading Risk can reveal. The fund, SAAF (Luxembourg) Insurance-Linked Opp
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Three cat bonds are expected to be brought to market in January, raising hopes of dealflow through the insurance linked securities (ILS) pipeline that has been blocked since September last year.
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The capital markets provide up to $40bn in catastrophe reinsurance capacity, 15-20 percent of the total, and recent capital withdrawals are contributing to the hardening of the reinsurance market, ac
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Global property reinsurance rates were up an average of 8 percent at the key 1 January renewals, according to a leading reinsurance broker. But overall reinsurance rate increases at 1/1 were modes
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Ratings agency Standard & Poor's (S&P) has affirmed its junk ratings on three catastrophe bonds affected by the collapse of Lehman brothers after their total return swaps were terminated and the thr
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The nascent catastrophe derivatives markets have now traded more than $440mn of notional volume since their inception in late 2007, Trading Risk can reveal. ICAP-JLT, the joint venture platform estab
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European insurance giant Allianz has called an early redemption of its pioneering $150mn Blue Wings cat bond, just eighteen months into its more than four year term. The class A floating rate notes -
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Swiss Re has closed its life insurance linked securities (ILS) unit and reiterated its commitment to nat cat ILS in a reshuffle of its financial markets division, Trading Risk can reveal. Ex-Credit
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Three executives from reinsurance broker RK Carvill have joined Tradition Financial Services (Tradition), its joint venture partner on the CHI cat futures initiative, Trading Risk can reveal. Patric
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Industry Loss Warranty (ILW) pricing for US perils has risen by over 30 percent in the last six weeks, reflecting the hardening traditional market and the withdrawal of hedge fund capacity from the r
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Structural issues and confusion over pricing levels have stalled any new catastrophe bond issuance for the remainder of 2008, Trading Risk can reveal. Despite optimism last month that $1-2bn of new
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Aspen Insurance's $100mn 2007 earthquake cat bond Ajax Re, which has been downgraded by both AM Best and S&P on the back of the Lehman Brothers bankruptcy has suffered a further blow after investors
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Investment bank Dresdner Kleinwort (DK) is expecting to close its first catastrophe derivative contracts before year-end, amounting to notional values in the "low tens of millions of dollars", accord
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Hedge fund Citadel Investment Group is to wind-up its $450mn collateralised Bermudian reinsurer CIG Re, according to reports. The reinsurer, which formed the $500mn all-debt sidecar Emerson Re in 20
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Five more core positions have been allocated in the newly re-structured investment banking group at the soon-to-be merged broking firm Aon Benfield, Trading Risk can reveal. As the structure chart
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Dedicated ILS investor Leadenhall Capital Partners LLP has received final approval from the UK's Financial Services Authority (FSA) to act as an investment manager for third party funds, Trading Ris
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Lloyd's industry veteran Michael Wade has launched a new convergence-focussed advisory firm, aimed at mid-tier reinsurers and brokers, Trading Risk can reveal. The firm, called Optex Group, combines
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