World Bank’s IFC partners on Indonesian parametric climate insurance

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The World Bank Group’s global development institute, International Finance Corporation (IFC), will collaborate with Indonesia’s PT Reasuransi MAIPARK to develop parametric insurance solutions for the country’s agribusinesses against the increasing threat and costs of natural disaster and climate events.

The IFC and MAIPARK, a specialist risk reinsurance firm owned by all licensed and general insurers and reinsurers in Indonesia, will look to work with local insurance firms to develop, sell, and even bundle a range of new index-based, or parametric insurance solutions designed to hedge the financial exposure against adverse weather events for agribusiness, agriculture-loan portfolios, and farmer groups, says the IFC.

The good, the bad, and everything in between

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Trustees are a vital component of reinsurance, and choosing the right one can be the difference between a smooth experience or a sticky one, as Robert Quinn of Wilmington Trust explains to Bermuda:Re+ILS.

In the world of highly regulated and complex reinsurance business, reinsurance trustees don’t get much limelight (until commencement of the deal, when the trustee is critical). But don’t let their low-profile demeanour diminish their significance. Trustees are a vital component of the transaction, and choosing the right one can be the difference
between a seamless and smooth experience or a sticky and slow one.

Robert Quinn, product leader for insurance collateral solutions at Wilmington Trust, has over the past 18 years seen the good, bad, and everything in between when it comes to providing trustee services, as he relates.

NMI Holdings to launch mortgage insurance-linked securities (ILS)

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NMI Holdings, Inc. has announced today that it is to launch a new mortgage insurance-linked securities (ILS) transaction, as it looks to secure reinsurance by transferring some of the risks associated with a portfolio of mortgage insurance policies to the capital markets.

NMI Holdings wholly owned subsidiary National Mortgage Insurance Corporation is to sponsor the mortgage ILS transaction and this will be the first time it has sought fully-collateralized mortgage reinsurance coverage from capital market investors.

In fact, NMI Holdings will be only the second to utilise an ILS or catastrophe bond type structure to transfer mortgage insurance risk, following on from AIG which became the first with its Bellemeade Re Ltd. (Series 2015-1) and Bellemeade Re II Ltd. (Series 2016-1) transactions for its United Guaranty subsidiary at the time.

PRA’s 2017 stress test to identify use of ILS and alternative capital

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The 2017 general insurance stress test from the UK’s Prudential Regulation Authority (PRA) division of the Bank of England is set to identify the use of alternative reinsurance capital, as it seeks information from general insurers on how their capital would respond to severe loss scenarios.

The PRA regularly runs these stress tests, in order to test re/insurer capital adequacy, reserves, and reinsurance arrangements under worst-case scenario situations such as major hurricanes, earthquakes, European windstorms and floods,  a major economic shock scenario.

Reinsurers deriving “significant benefits” from alternative capital: Aon Benfield

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Property & casualty reinsurance firms are deriving “significant benefits from their ability to leverage alternative capital” according to broker Aon Benfield, helping them to lower the cost of their underwriting capital and raising efficiency.

The penetration of alternative reinsurance capital continues apace, with the latest figures showing that alternative and ILS capital grew 13% and reached $81 billion recently, sustaining its recent growth rate and actually increasing its rate of growth in the fourth-quarter of 2016.

As alternative capital has continued to grow, now contributing an impressive 14% of total global reinsurer capital of $595 billion, according to Aon Benfield’s numbers.

In its latest Aon Benfield Aggregate report (available here) the broker explains that those reinsurers that have embraced insurance-linked securities (ILS) and the capital markets are deriving tangible benefits from alternative capital.

Alternative capital hits $81bn, sustains growth rate: Aon

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Alternative capital in the insurance and reinsurance market and across the range of insurance-linked securities (ILS) and collateralised products reached a new high at $81 billion and encouragingly sustained its recent pace of growth, according to broker Aon Benfield.

It had been thought that alternative reinsurance and ILS capital growth had been slowing in 2016, but the full-year figures from Aon Benfield actually show that it sustained the rate of growth from 2015 and in the last quarter of the year the rate of growth actually picked up a little again.

$81 billion is a new high for the insurance-linked securities (ILS) and collateralised reinsurance market, with another key milestone passed. But we believe the fact that growth was sustained through one of the most competitive years on record may prove to be more important.

Ireland favourite EU location for insurers after Brexit, claims survey

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Ireland is the most attractive location for insurers seeking to create a unit within the EU to retain access to the common market after the Brexit vote, according to a survey conducted by Intelligent Insurer.

Insurers operating in London’s international insurance hub are worried that they may lose their passporting rights to operate in the EU after Brexit. The passporting mechanism provides a company authorised in one member state the ability to conduct cross-border business without being required to apply for any additional authorisation or hold assets locally. Insurers are therefore seeking to create a subsidiary in an EU country, if they don’t already have one, to secure access to the EU market.

“PUSHING THE BOUNDARIES OF ILS”

Clive O’Connell, McCarthy Denning’s Head of Insurance and Reinsurance recently participated in a London Market Roundtable organised by Insurance Day newspaper on the subject of Insurance Linked Securities(ILS) and the new initiative, announced in the Chancellor’s Autumn Statement, that is designed to create an ILS market in London.

Insurance Day provides the insurance industry with the latest business intelligence, news and market data for business decision makers in the international insurance community.

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