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PKA of Denmark sees 15.7% return from ILS investments in 2015

artemisORIGINAL PUBLICATION HERE

PKA Ltd. (Pensionskassernes Administration A/S), a large pension fund investment service provider for employee pension funds in Denmark, has highlighted the stability and return possible from ILS investments, achieving 15.7% from its allocation in 2015.

PKA has been investing in insurance-linked securities (ILS), including catastrophe bonds and private ILS or collateralised reinsurance deals, since 2011, when it made a decision to add the asset class to its alternative strategies with a $150m allocation to Swiss ILS specialist manager Twelve Capital.

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The four commandments of reinsurance, according to Warren Buffett

artemisORIGINAL PUBLICATION HERE

There are four commandments that any company operating in the insurance and reinsurance industry should follow, according to Berkshire Hathaway’s Sage of Omaha Warren Buffett, and interestingly they reflect the discipline of the ILS market.

Writing in his annual letter Warren Buffett explained that these four commandments are disciplines that any insurance or reinsurance operation must follow at a minimum. They reflect underwriting expertise, prudent reserving, risk appropriate pricing and having the discipline to walk away if necessary.

Insurance Linked

Perspectives interview with Eugene Gurenko – The World Bank Group

Insurance LinkedORIGINAL PUBLICATION HERE

Eugene Gurenko is a Lead Insurance Specialist at the joint World Bank/IFC Finance and Markets Global Practice. He has worked at the World Bank Group since 1998 where he has helped to develop catastrophe risk management solutions for the World Bank client countries,including the Turkish Catastrophe Insurance Pool – currently one of the largest earthquake insurers in the world.

What are some of the reasons behind the significant protection gap (the difference between economic and insured catastrophe losses) in emerging markets?

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Hybrid balance-sheet, the future of reinsurance

artemisORIGINAL PUBLICATION HERE

Reinsurance firms operating with a hybrid balance-sheet approach to capital sources, management and funding, are the future of the industry, according to speakers at the SIFMA IRLS 2016 conference in New York.

Speaking at the event on a panel discussing how alternative capital and insurance-linked securities (ILS) feature increasingly as tools available to help reinsurance companies better manage their capital and enhance their cost-of-capital, executives pointed to the likelihood that companies take an increasingly agnostic approach to form and structure.

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ILS is efficient risk transfer, capital market innovation: SIFMA

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Insurance, reinsurance and risk-linked securities (ILS or IRLS) are an “example of an innovative solution which allows the capital markets to provide an efficient and growing means to transfer risk,” according to SIFMA EVP Randy Snook.

The capital markets enable the transfer and distribution of risk, Snook explained in his opening remarks to the audience at yesterday’s SIFMA IRLS 2016 conference in New York.

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Clearing the path for catastrophe bond issuance

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Cat bond efficiency has come a long way in the last decade. The premature grey hair and portly reflection that peers back at me in the mirror serves as a reminder of a time when even the simplest deals seemed to take months of work.  A whole thriving food delivery industry grew up in the City of London just to keep us fed and watered back when success was measured on capacity to work a 120-hour week, as much as on quantitative ability.

Much has changed since then. Of course, complex ground-breaking deals still take a monumental amount of effort to place successfully—just ask anyone who’s been involved with Metrocat,PennUnion or Bosphorus, and they’ll tell you it’s a very intensive process.

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Alternative reinsurance capital & ILS fueling innovation: Marsh

artemisORIGINAL PUBLICATION HERE

While evident that the wealth of alternative reinsurance capital has contributed to the decline in rates in the property catastrophe re/insurance industry, its presence and influence has also fuelled innovation as insurers take a more aggressive stance, according to Marsh.

Rate declines across the majority of business lines in the U.S. P&C sector persisted at the key January 2016 renewals, with the challenges of last year continuing into 2016 and showing little or no signs of change.

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Insurance-linked strategies, the lowest volatility hedge fund segment

artemisORIGINAL PUBLICATION HERE

The insurance-linked securities (ILS) asset class, of funds featuring catastrophe bonds, collateralised reinsurance contracts, quota share and sidecar investments, industry loss warranties (ILW’s) and other private ILS, displays the lowest volatility of any hedge fund strategy.

According to a recent report from alternative investment and hedge fund asset information service Preqin, across over 100 hedge fund strategy segments the insurance-linked strategies asset class displayed the lowest volatility on either a 3 or 5 year basis.

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Markel CATCo fund shareholders benefit from 18.1% 2015 total-return

artemisORIGINAL PUBLICATION HERE

Shareholders in the retrocessional reinsurance linked investment focused CATCo Reinsurance Opportunities Fund Ltd. benefited from an 18.1% total-return over the course of 2015, as dividends boosted the 11.58% net return.

The 11.58% net return that insurance and reinsurance linked investment manager CATCo returned to shareholders could have been as high as 14%, equaling the 2014 figure, were it not for the UK floods at the end of the year.

The provision of dividends and capital return throughout the year make the share price total-return of the fund much higher, which helps to make this type of ILS investment a buy and hold style investment for many shareholders.