Trading Risk September 2017

Schroders-owned ILS manager Secquaero has won a significant $200mn+ mandate, according to sources, as a number of companies target growth in this sector.

Hurricane Harvey's impact on Texas could potentially produce an underweight loss for the ILS market relative to the broader reinsurance sector.

This is certainly not going to be a year where the reinsurance industry is twiddling its thumbs at the annual Monte Carlo Rendez-Vous.

Cat bond broker-dealers said the market had plenty of impetus left after a record-breaking first half of 2017.

The $430mn Spectrum Re cat bond issued in June this year by fronting carrier Tokio Millennium Re was ultimately for the benefit of Credit Suisse's ILS entities, sources told Trading Risk.

Average ILS fund returns reached 2.23 percent by the end of July, according to the Eurekahedge ILS Advisers Index.

Managers of Bermudian special purpose insurers (SPIs) are taking steps to upgrade their vehicles to Solvency II-equivalent structures, following the introduction of new German regulations last year that made it more difficult for non-European reinsurers to conduct business in the country.

The Prudential Regulation Authority (PRA) is due to issue rules based on its interpretation of the UK's recently published ILS regulations at the end of this month or in early October.

Hurricane Harvey will impact reinsurer earnings but is unlikely to spur a reversal in softening pricing, analysts said.

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.

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.

Schroders has appointed Alan Cauberghs as head of private assets to oversee its activities in various sectors, including its ILS division Secquaero.