Trading Risk September 2018
Nephila’s sale to Markel is likely to accelerate the ILS manager’s push into primary insurance by bringing it closer to one of its key fronting partners as well as a carrier with distribution reach to the ultimate insurance buyers.
Citrus Re cat bond losses have more than doubled since May amid rising claims from Hurricane Irma, with the total $324mn payout expected to flow to Heritage set to be a new record for the ILS market.
If you rewind to Monte Carlo a decade ago, Nephila and other ILS managers were merely an exotic corner of the reinsurance markets – independent, small teams slugging away at building up franchises. Ten years on and the industry’s largest manager has just sold up to Markel in a landmark M&A deal, and the ILS top 10 have boomed from under $10bn to $68bn in size.
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.
Markel Catco has said adverse development covers have never been a material component of its portfolio, although sources told this publication the firm has been offering the product to buyers for a number of years.
The 2017 cat losses are set to diminish the financial crisis’ historical ILS impact.
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.
The omega ratio may provide a better view of risk-weighted returns within the ILS asset class, given the rare chance of a hefty loss, than other statistical benchmarks, commentators have suggested.
Securis Investment Partners has hired Paul Wilson from RMS and Adam Tidball from MS Amlin to lead its non-life catastrophe analytics team.
Three ILS funds have joined the Florida Hurricane Catastrophe Fund (FHCF) programme this year, using Tokio Millennium Re as a fronting partner.
California has suffered another record-breaking wildfire season but the impact on the ILS market is likely to be marginal, sources have said.
Hurricane Lane, which hit Hawaii earlier this month, is set to be more of a flood event than a wind event for insurers, rating agency AM Best has said.
Lloyd’s is still in talks with ILS investors over a deal to cover the Central Fund, although there is uncertainty in the marketplace that an agreement will be struck in time for the 1 January renewal.
Chaucer may be the first of a number of Lloyd’s and London market insurers that are up for sale to change hands, sister publication The Insurance Insider has reported.
Mt Logan Re investors took $133.8mn of losses in Q2 as its parent Everest Re suffered from adverse development on 2017 claims, undoing the benefit of reserve releases booked in the fourth quarter last year.
As the challenging operating market leads more and more reinsurers to raise third-party capital, it seems strategic benefits might be easier to come by than financial benefits, commentators have suggested.
Covea’s reinsurance buying team say they value the face-to-face relationship with cat bond investors.
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.
People moves in the ILS market, September 2018