April 2011/1

The cat bond market shrank in the first quarter of 2011 and uncertainty over traditional reinsurance rates may stall the sales pipeline for the rest of the year, according to GC Securities.

Ratings agency AM Best has placed $175mn of Flagstone Re's 2009 Montana Re cat bond under review for a downgrade as it absorbs the revised risk profile of the notes following RMS' version 11 US wind model.

A combination of high volumes of cat bond maturities and a lack of anticipated new issuance in Q2 2011 will depress pricing as investor capital supply outstrips demand, Aon Benfield Securities (ABS) predicts.

The North Carolina state wind pools are offering a further $200mn of single-state US wind risk to the capital markets via its Johnston Re shelf facility.

Ratings agency Standard & Poor's (S&P) has put 17 catastrophe bonds on CreditWatch with negative implications over concerns that the new RMS hurricane model would materially change their profile.

Well-known convergence executive Des Potter has left Aon Benfield Securities, Trading Risk can reveal.

Investment bank Deutsche Bank has signed up Michael Halsband as a director in the firm's capital markets and treasury solutions group after his departure from Goldman Sachs.

Alterra Capital will take a $60-100mn net loss on the 11 March Japanese earthquake and it may also see an investment loss of up to $25mn on a cat bond it owns that is exposed to the event.

Baldwin ILS fund first to report March loss; Catco goes back to investors for $7mn;Securis holds on listed fund; GAM markets Fermat fund

Bermuda-based retro and industry loss warranty (ILW) fund Aeolus is raising additional capital to deploy ahead of the US wind season, while its corporate restructure is on track to complete later this year, according to sources.

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.

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.

The ‘C' in P&C insurance has to date been a closed market for the ILS world, but P&C insurance information provider ISO hopes that a new casualty index may open up new possibilities for risk transfer to the capital markets.

Johnson breaks with Tradition; $10mn IFEX hurricane trade; WRMA heads to Oz

Insurance entrepreneur Neil Eckert is enacting a management buy-out of the catastrophe derivative trading platform IFEX, Trading Risk understands.

Quake products are leading the rise in industry loss warranty (ILW) prices, with California prices up by two thirds in the wake of the catastrophic 11 March Japanese earthquake, Trading Risk understands.

FSA blocks triple-X loophole; BNPP in EV deal; Pension funds may offload up to £20bn of risk

Bankers and reinsurers are confident they won't lose out from the precedent set by London-listed insurer Legal & General, which bypassed other suppliers to complete a transfer of triple-X redundant reserve reinsurance earlier this year.

Firms seeking reinsurance solutions for their triple-X and A-XXX redundant reserves are pushing for better pricing and longer-dated deals, as the number of bankers chasing their business rises.

Casualty index launched; K6's quake knock; Crystal Credit redeemed; Aspen's collateral protection

Hedge fund-backed reinsurer Greenlight Re reported a 57 percent year-on-year drop in net income to $90.6mn for 2010.

Risk and insurance management specialist Kane Group has purchased leading cat bond administrator HSBC Insurance Management (HIM) in a private equity-backed deal worth $27.5mn.

The California Earthquake Authority (CEA) is working to source $150mn of cat bond capacity from the capital markets after a 15-month hiatus from the ILS sector.

US coast faces greater hurricane threat; Guy Carp gains CCRIF account; Quakes make 2010 7th costliest cat year; Industry Euro wind exposure up 5%: Perils

(Re)insurer opinion on preferred cat bond triggers has diverged and become more entrenched following losses on parametric bonds in the wake of the Japan earthquake.

Catastrophe losses have mounted quickly in the first quarter of 2011 but have not been enough to turn the softening reinsurance market, two of the major insurance brokers said in their reports on the 1 April renewals.

Cat bond sponsors and investors have just days to wait until they receive a final decision on whether $1.25bn of ILS capacity will be triggered by the 11 March quake that devastated north-eastern Japan.

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.

Investment bank Credit Agricole has completed a $350mn, 10-year structured letter of credit deal providing MetLife with capital relief on its life insurance reserves.

Munich Re placed $100mn of US and European wind cover in the cat bond market last month just days after the 11 March Japanese earthquake and tsunami.

Cat bond values suffered their worst decline since the 2008 financial crisis in March as investors assessed losses after the Japanese earthquake.

Cat bond traders expressed satisfaction with secondary trading liquidity in the immediate aftermath of the 11 March Japan earthquake, with many spying yield opportunities in distressed bond prices.

The market is receptive to a repeat of Goldman Sachs' innovative 2010 health insurance deal Vitality Re, Trading Risk understands.

After months of waiting, the (re)insurance industry received the final expected loss numbers from modelling firm Risk Management Solutions' (RMS) revised US wind model in March.

Serial (re)insurance entrepreneur Don Kramer is talking to institutional investors about opportunities in the insurance-linked capital markets sector, Trading Risk can reveal.

A crushing Q1 catastrophe loss toll and sweeping US wind model changes have spooked the cat (re)insurance sector ahead of the North Atlantic hurricane season, fuelling talk of contingent capital and sidecar solutions to ease capital concerns.