Kinesis’ third-party capital profits continue to build at Lancashire


Once again, third-party reinsurance capital unit Kinesis Capital Management has provided an increased profit contribution to specialty insurance and reinsurance company Lancashire Holdings, which will be welcome as the re/insurer remained disciplined in challenging specialty market conditions.

To date Kinesis has deployed more than $340m of fully-collateralized protection through its unique, multi-class reinsurance product offering. The product has proved popular with cedents to date and is now bringing in a growing profit for Lancashire, helping the re/insurer to offset declines in lines of business where it has pulled-back due to market conditions.


RenaissanceRe Reports Net Income of $73.2 Million for the Second Quarter of 2015


PEMBROKE, Bermuda–(BUSINESS WIRE)–RenaissanceRe Holdings Ltd. (NYSE:RNR) (the “Company” or “RenaissanceRe”) today reported net income available to RenaissanceRe common shareholders of $73.2 million, or $1.59 per diluted common share, in the second quarter of 2015, compared to $120.8 million, or $2.95, respectively, in the second quarter of 2014. Operating income available to RenaissanceRe common shareholders was $99.9 million, or $2.18 per diluted common share, for the second quarter of 2015, compared to $93.6 million, or $2.28, respectively, in the second quarter of 2014. The Company reported an annualized return on average common equity of 6.6% and an annualized operating return on average common equity of 9.1% in the second quarter of 2015, compared to 14.2% and 11.0%, respectively, in the second quarter of 2014. Book value per common share increased $1.22, or 1.3%, in the second quarter of 2015 to $96.43, compared to a 3.0% increase in the second quarter of 2014. Tangible book value per common share plus accumulated dividends increased 1.9% in the second quarter of 2015, compared to a 3.5% increase in the second quarter of 2014.


AlphaCat hits $2.08bn of assets, increases gross written premiums


AlphaCat Managers Ltd., the ILS and third-party capital focused unit of Bermuda headquartered insurance and reinsurance group Validus, has passed the $2 billion mark for the first time, reporting $2.08 billion of assets under management.

During the second-quarter the AlphaCat unit raised an additional $224m of capital, $213.9m of which was from third-party reinsurance investors. Also during the quarter, $52.4m was returned, $19.3m to third-parties.

At the end of Q1 AlphaCat counted its total assets under management at $1.88 billion, the same number it had reported at the end of 2014. So the insurance and reinsurance-linked investments unit has had the opportunity to seek out further growth during Q2, enabling it to grow AuM by almost 11%.


Sterling Capital adds insurance-linked securities to mutual fund


Further evidence of the continued appreciation of insurance-linked securities (ILS) such as catastrophe bonds, and reinsurance linked strategies in general today, as Sterling Capital Management announced that it’s added ILS to one of its mutual funds.

Over the last few years there have been an increasing amount of more traditional asset management firms which have been adding alternative asset classes to their funds, with the insurance-linked asset class one of the beneficiaries.


Xuber’s Bermuda Reinsurance Roundtable


Board Member of Phoenix CRetro and Partner at Appleby Bermuda Brad Adderley and executives in the reinsurance industry, participated in Xuber’s Bermuda Reinsurance Roundtable to discuss market conditions, innovation, technological changes and analytics.

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Risk assumption: re/insurers vs. funds


In his second insurance-linked securities (ILS) blog, Clive O’Connell, partner, Goldberg Segalla, talks about the challenges of risk assumption for re/insurers compared with ILS funds.

oconnell-clive-1-.jpgILS funds can participate in risk assumption in a number of different ways. They can invest in catastrophe and other bonds, participate in Industry Loss Warranty (ILW) agreements made either as excess of loss reinsurances or as ISDA derivatives; they can add capacity to an insurer or reinsurer through side cars.

In each case a different vehicle is used; either an SPV (special purpose vehicle) or an ISPV (insurance special purpose vehicle) depending on whether the risk is accepted by way of re/insurance or as a derivative or bond or through a protected cell captive (PCC).

ILS funds have great flexibility and can even alter the structure of both the deal and vehicle that they will use for it, midway through negotiations.

Re/insurers are significantly less flexible. They are bound to accept risk through reinsurance and insurance contracts. Reinsurers and insurers cannot accept risk through derivatives or bonds. In their hands a derivative is a wagering agreement and unenforceable.


Investors planning to allocate to ILS post-event may be too late


The impressive growth that the insurance-linked securities (ILS) market has witnessed, amplified by a host of new capital providers, could present challenges for potential investors that aren’t already active in the space.

As the ILS market matures there is an increasing realisation that institutional investors already allocating to ILS are likely to increase their contributions significantly, after any event that causes a reinsurance market dislocation or increase in pricing.

As a result, for those capital market investors seeking to wait out the softening of the reinsurance market and to come in at the first sign of a market turn, there is a risk of missing out as the sector may already have sufficient capital commitments.

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A valuable proposition


Martin Davies, chief executive at AHJ Capital Markets, explains the benefits of using ILS to create shareholder value.

The ultimate test of any financial instrument is whether it increases the corporate value of its issuer. Does the instrument improve the quality of the issuer’s earnings? Does it improve return on capital? In short, does it make the shareholders richer?

Since their birth in the mid-1990s, insurance-linked securities (ILS) have provided an efficient risk hedging technique for insurance companies. They now offer a range of benefits, including attractive pricing, innovative structural features and collateralised or other high quality security.

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Deutsche Asset & Wealth Management enters ILS market


Deutsche Asset & Wealth Management has entered the insurance-linked securities (ILS) market in a bid to provide clients with access to the asset class. 

Led by Roger Douglas and Michael Amori, the team made its first investments earlier this year. It will continue to deploy capital as it sources opportunities in the areas of property and casualty risk as well as in mortality and longevity risk.

An initial strategy was seeded by Tages Capital, a specialist alternative investment manager.

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Bermuda played key role during economic crisis


Bermuda played a key role in helping the world escape the clutches of the 2008 world credit crunch.

This is the finding of a new report, ‘Bermuda in the World Economy’, released yesterday (July 13, 2015) by the Bermuda Government.

The report focuses on the role that Bermuda plays in the world economy as a leading supplier of insurance and financial services and as an innovative financial centre.

During the five year period between 2008 and 2013, major economies increased their investment into Bermuda financial markets significantly, particularly in catastrophic loss risk management.