Early take: 1 January renewals


• The overall pre-Christmas theme of disappointment for reinsurers has continued, with most business now firm ordered with only modest rate increases for clients without losses.

• Disappointment on property rates for reinsurers reflects continued supply-demand imbalance which continues to favour cedants. Q3 and Q4 cat is now pegged lower at $75bn-$95bn, not $110bn, which erodes reinsurer capital only mid-single digits.

IMF backs calls for Caribbean catastrophe bond


The International Monetary Fund (IMF) is putting its weight behind calls for the use of catastrophe bonds to help the Caribbean nations to increase their resilience to and ability to recover from disasters, after a hurricane season that has impacted the region heavily.

After the devastating impacts of hurricanes Irma and Maria in the Caribbean, talk has turned once again to how to provide more disaster risk financing and parametric insurance to the island nations most at risk, with a regional catastrophe bond back on the agenda as a way to finance and provide reinsurance for regional risk transfer.

Speed-to-market still a sticking point for UK ILS: Clyde & Co


Speed-to-market remains the main sticking point for the United Kingdom’s Risk Transformation Regulations 2017 and the Risk Transformation (Tax) Regulations 2017, which constitute the UK’s insurance-linked securities (ILS) regulatory regime, according to law firm Clyde & Co.

The issue of speed of approval remains the one which could hold back the UK’s potential as an ILS issuance hub, as market practitioners question whether regulators can respond to and approve applications for new UK domiciled ILS vehicles quickly enough.

ILS spreads need to widen before Baillie Gifford allocates more: McIntyre


Global asset management firm, Baillie Gifford, is unlikely to significantly increase its allocation to the insurance-linked securities (ILS) space until spreads widen, according to Baillie Gifford’s David McIntyre, one of the managers of its Diversified Growth Fund.

Currently, the asset manager’s allocation to the ILS sector sits at just under 4%, but in order for the firm to increase its allocation spreads would need to widen, said McIntyre, in an interview in the second half of this year.

Hannover Re facilitates $27m Seaside Re 2018-3 private cat bond


German reinsurance firm Hannover Re has facilitated a second private catastrophe bond this month with the completion of a $27 million Seaside Re (Series 2018-3)transaction, the second series of cat bond notes to be issued through its Kaith Re Ltd. Bermuda domiciled segregated accounts vehicle in recent days.

Just over a week ago a $20 million Seaside Re (Series 2018-1) private cat bond, or cat bond lite as they are often termed, was issued using Hannover’s Kaith Re reinsurance vehicle, which as we explained at the time saw the reinsurer acting as a risk transformer and facilitator in securitising property catastrophe risks.

$10m LI Re 2017-1 private cat bond issued from Hannover Re vehicle


German reinsurance giant Hannover Re has facilitated another private catastrophe bond transaction, with the issuance of a $10 million LI Re (Series 2017-1) deal that securitises California earthquake reinsurance risk for an unknown cedent and certain ILS investors.

Hannover Re’s Bermuda domiciled segregated accounts vehicle Kaith Re Ltd. has been involved in a number of private ILS, or cat bond lite, transactions this month, with this being the third following $20 million Seaside Re (Series 2018-1) and $27 million Seaside Re (Series 2018-3) private cat bond deals.

Thopas Re Ltd., a $95m reinsurance sidecar launched by Chaucer


International specialty insurer Chaucer plc has launched Thopas Re Ltd., a Bermuda domiciled fully collateralized reinsurance sidecar that will provide additional capital markets backed capacity to the firm’s Chaucer Syndicate 1084’s global reinsurance portfolio in 2018.

Chaucer is just the latest firm to look to third-party capital and ILS structures for a way to leverage the efficiencies of the capital markets to augment its underwriting capacity.

Vehicles like Thopas Re let insurers such as Chaucer secure reinsurance from the capital markets, on a fully collateralized basis, which ultimately serves to act as a capital lever and expansion of their underwriting capacity, at what can often be a lower cost-of-capital than the traditional markets.

Nephila backs Volante, as it aims to be a global MGA for alt capital


ILS fund manager Nephila Capital has made an equity investment in newly launched multi-class and multi-territory managing general agent platform Volante Global Limited (Volante), a firm that has ambitions to help alternative capital investors broaden their reach.

Volante has been launched with the ambition of becoming a best-in-class global underwriting and distribution MGA platform.

The firm has been founded by ex-Group CEO and CUO of DUAL International Ltd. Talbir Bains, who believes that Volante can become a conduit to risk for alternative capital providers, helping to broaden their reach outside of the typical U.S. property catastrophe space.

Insurance industry not fulfilling its full potential in cyber risk management-OECD


While the insurance market is already contributing to cyber risk management, it has the potential to do much more, says a recent report from the Organisation for Economic Co-operation and Development (OECD).

While not a substitute for investing in cyber security and risk management—having good cyber security and avoiding a disruption is preferred— insurance coverage for cyber risk can make an important contribution to the management of cyber risk. The market currently does this by sharing expertise, differentiating its pricing based on levels of risk and providing valuable support to both large and small companies in responding to crises.