Schroders ILS assets up 31%, closes cat bond fund to maintain returns

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Global asset management group Schroders saw strong growth across its insurance-linked securities (ILS) investment business in the last year, with assets under management reaching $2.482 billion and high demand causing it to shutter its GAIA cat bond fund.

Schroders has been particularly active in the insurance and reinsurance linked investments market over recent years, with its UCITS GAIA platform helping it to bulk up assets from catastrophe bond investors, while its other strategies which also include collateralised reinsurance and private ILS have also grown.

At the end of 2015 Schroders ILS and reinsurance linked assets under management had reached $1.9 billion, but the investment manager told Artemis that this has grown by 31% ending January 2017 at an impressive $2.482 billion.

South Korea’s POBA pension fund could double ILS allocation

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South Korean pension fund manager the Public Officials Benefit Association (POBA), which manages for government workers pensions and has over US$7 billion in assets under its control, is reported to be planning to double its allocation to insurance-linked securities (ILS).

In October 2016 we reported that the South Korean POBA pension fund manager had allocated around $40 million across a roster of three ILS and reinsurance-linked fund managers, LGT ILS Partners, Leadenhall Capital Partners and Nephila Capital.

That followed a typical period where the pension fund manager had assessed the sector, looked at the potential routes to deploy capital and decided on a multi-manager approach. The allocation is said to be to funds largely focused on catastrophe bonds, we cannot confirm whether any private ILS or collateralised reinsurance is included.

Sovereign cat bonds can help governments borrow, improve welfare

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For sovereign governments, having a source of disaster risk financing and insurance provided by catastrophe bonds can help the government to borrow more on the capital markets, improve its standing with debtors and ultimately provide welfare gains to the population, according to a study.

The study authored by Eduardo Cavallo, a Lead Economist at the Research Department of the Inter-American Development Bank (IDB), alongside Eduardo Borensztein also of the IADB and Olivier Jeanne from Johns Hopkins Uni., finds that as well as providing a source of immediate post-disaster insurance capital, catastrophe bonds can also have wider-reaching benefits for a government’s ability to borrow, which can help to enhance welfare.

Cavallo explains that cat bonds can provide key advantages over other forms of insurance and reinsurance, as they can be structured to payout almost immediately based on the severity of a disaster if using a parametric trigger and the capital is held securely in order to support the quick payout.

Blue Capital sees more stable reinsurance pricing at recent renewal

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The Blue Capital Global Reinsurance Fund has revealed more stable reinsurance pricing despite continued market pressures in their January renewals as the company reported on its underwritten portfolio for 2017.

The London and Bermuda stock exchange listed reinsurance and insurance linked securities (ILS) investment fund, which is managed by Blue Capital Management the third-party capital arm of re/insurer Endurance, posted a total Net Asset Value (NAV) return, inclusive of dividends, of 8.3% in 2016.

This time last year, the fund boasted an NAV return of 9.6% for 2015, but given the continued downwards pressure on pricing, January 2017 renewals demonstrated a more stable outlook with a price decrease down by a moderate 3% compared with more significant reductions experienced during previous reinsurance renewal periods.

Russia starts work on climate adaptation strategy

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Kremlin wants new plan by mid-2018, as brief sent to regions highlights focus on extreme weather events, permafrost thawing

Russia has started working on a national climate change adaptation strategy, with ministries and regional officials to asked assess the risks of adverse impacts and possible adaptation measures.

With a delivery date pencilled in for mid-2018, ministry of environment officials told Kommersant, a business daily, they wanted to “get the regions to think about working on adaptation plans — so far most of them are busy dealing with consequences but many of those negative changes require adaptation”.

Cedents, sovereigns could benefit from ILS growth in Asia: Guy Carpenter

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Currently, the utilisation of alternative risk transfer solutions such as catastrophe bonds and collateralised reinsurance primarily focuses on mature Asian markets, but with the marketplace keen to expand its remit cedents in developing Asian markets could stand to benefit.

This is according to reinsurance broker Guy Carpenter, which explores the lack of insurance penetration in parts of Asia, which is home to a “confluence of people and perils.”

Blue Capital Re beats, underwrites higher rate-on-line portfolio for 2017

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New York stock exchange listed fully-collateralised reinsurance company Blue Capital Reinsurance Holdings Ltd. has beaten analysts estimates in the fourth-quarter and reported today that its business underwritten for 2017 should produce a higher net rate-on-line for the portfolio.

Blue Capital Re, which is an Endurance subsidiary operated by the reinsurers third-party capital management unit Blue Capital Management, reported net income of $4 million (or $0.46 per share) for Q4 2016 and $14.3 million (or $1.63 per share) for the full-year 2016.

KBW analysts said that Wall Street had a $0.08 estimate for Q4 and its own was just a $0.02 estimate, so on that basis Blue Capital Re beat the Street significantly in the last quarter.

It’s an impressive result and as Adam Szakmary, President and CEO of Blue Capital Re, explained; “2016 was a solid year for Blue Capital as we generated growth in book value of 7.6% inclusive of dividends and a combined ratio of 65.0% against a backdrop of the costliest year for industry losses within the last five years.”

Hawaii seeks parametric disaster insurance program for hurricane risk

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Proposed legislation in the U.S. state of Hawaii aims to establish a parametric disaster insurance pilot program to transfer its growing hurricane risk to the private insurance and reinsurance markets, which could include capital markets-backed capacity.

The bill explains that Hawaii is extremely exposed to natural disaster events such as hurricanes, of which its investment in post-disaster financing and disaster preparedness is disproportionate.

Currently, Hawaii relies on the U.S. National Flood Insurance Program (NFIP) and the Federal Emergency Management Agency (FEMA) for disaster recovery funding and assistance.