ILS’ expansion beyond catastrophe risk holds “promise & peril” – WTW

ORIGINAL PUBLICATION HERE

Expansion of the insurance-linked securities (ILS) and catastrophe bond market beyond the traditional property catastrophe exposures holds both “promise & peril” for market participants, according to brokerage Willis Towers Watson.

The Willis Towers Watson Securities division of the broker, that structures and arranges cat bond and ILS transactions, discussed the potential for ILS market expansion more deeply into both insurance and reinsurance risks in its latest quarterly report.

The firm notes that “The ILS market is roaring forward through the first half of 2018” and as its asset base increases along with transaction volumes, the need for ongoing expansion of the ILS asset class is clear.

Nephila Capital to be 100% acquired by Markel

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Nephila Capital, the world’s largest investment manager specialising in catastrophe and weather insurance-linked securities (ILS) and reinsurance linked assets, is to be 100% acquired by Markel Corporation in a move that is certain to create waves in the marketplace.

Nephila Capital was originally launched in 1998 by founder Frank Majors and Greg Hagood, since when the firm has created a global underwriting powerhouse for catastrophe and weather risks, both on the reinsurance side and more recently sourcing assets through direct insurance markets.

This 20 year journey has resulted in an ILS and reinsurance investment manager with north of $12.2 billion of assets under management and underwriting or risk origination platforms in Bermuda, London, and the United States.

Investor appetite for alternatives rising, diversification hunt continues

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Institutional investor appetite for alternative investment asset classes is on the rise, with more investors now allocating to alternative asset classes and the main driver continues to be a hunt for diversified returns for their portfolios.

The percentage of investors allocating to three or more different alternative asset classes has risen to 50% in 2018, up from 39% three years ago, according to the latest data from alternative investments specialist data provider Preqin.

Now 79% of the 530 institutional investors surveyed in June 2018 are allocating to at least one alternative asset class and as it is the search for diversification for their portfolios that continues to be the major driver investors are seen to be allocating to an increasing number of alternative asset classes as well.

Региональная конференция ПРООН по финансированию последствий стихийных бедствий

ОРИГИНАЛЬНАЯ ПУБЛИКАЦИЯ НА АНГЛИЙСКОМ ЗДЕСЬ

Стихийные бедствия и сопутствующие им экономические потрясения представляют серьезную угрозу человеческим жизням и благосостоянию, особенно в развивающихся странах. Финансовые потери от катастроф всегда были большими, но в последнее время их размер только увеличивается. За период 2005-2014 годов непосредственно в регионе Восточной Европы и СНГ произошло 314 катастрофических событий, повлекших гибель более 60,000 человек и нанесших урон 11 миллионам, с ущербом около 25 миллиардов долларов США.

Как в развитых, так и в развивающихся странах, недостаточная устойчивость к стихийным бедствиям (все чаще, оказывающим значительное косвенное воздействие далеко за пределами события), представляет растущую угрозу экономическому росту и глобальной безопасности.

UNDP Disaster risk reduction financing regional conference

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Disasters and the associated economic shocks are a significant threat to human life and personal wellbeing. While the costs have always been significant, disasters are increasingly more expensive.  Between 2005-2014, the Eastern Europe and Central Asia region alone faced 314 disasters, resulting in more than 60,000 people killed, 11 million people affected and US$25 billion in damages.

A lack of resilience to disasters (which increasingly have massive consequential impacts well beyond the direct event) in both developed and developing economies is an increasing threat to economic growth and global security. Therefore, investors seeking to mitigate these risks need to prioritize funding for development that targets resilience and sustainability provided by better infrastructure.

Treading the fine line to ILS success

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Bermuda has solidified its place as the go-to location for insurance-linked securities in recent years, according to Brad Adderley, corporate partner at offshore law firm Appleby.

Insurance-linked securities (ILS) are collateralised products. They are all linked to some kind of collateralised security—whether it’s a contractual security, a note, or a preference share, it’s linked to something concrete.

In Bermuda we started off with ILS being a ‘mom and pop’ captive in the 1990s. People said ‘I can’t have my own captive because I don’t have at least one million dollars in net premiums’, which at the time was the premium threshold needed to have your own captive. So what did they do? They rented a cell from a rent-a-captive or a transformer or an ILS platform from one of the insurance managers.

ILS investor appetite uninhibited by recent losses: Swiss Re

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Global reinsurance giant Swiss Re has noted the continued and increased appetite of insurance-linked securities (ILS) investors to allocate capital to the sector, despite recent losses and potential ongoing loss development from 2017’s catastrophe events.

The Switzerland-based reinsurer’s Capital Markets unit has released its H1 2018 ILS report, which, explores issuance in the first-half of the year following the costliest catastrophe loss year on record for global insurers and reinsurers.

According to Swiss Re, issuance in H1 2018 reached $7.3 billion from 20 transactions, which, while extremely strong, is below the $8.4 billion of issuance witnessed in the same period last year, which ended up being a record full-year for catastrophe bond issuance.

Hannover Re sees ongoing opportunities in ILS: Henning Ludolphs

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Reinsurance giant Hannover Re continues to take advantage of the expanding insurance-linked securities (ILS) sector, and sees further opportunities in a marketplace that is “here to stay,” according to Henning Ludolphs, Managing Director of Retrocessions & Capital Markets at Hannover Re.

Artemis recently discussed Hannover Re’s view of the ILS market with Ludolphs, exploring the outlook of the sector following the events of 2017 and the impressive response of the investor and sponsor base, as well as what areas of the sector the Germany-based reinsurer sees opportunities going forward.

He explained that the ILS market passed an “important”, but not “the big test” in 2017, paying losses in line with agreed documentation, and actually reloading and increasing in time for the January 1st, 2018 renewals season.

ILS fees should reflect the new market reality: ILS investors

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The level of fees paid by end-investors in insurance-linked securities (ILS) are often too high, but this is due to the inefficiencies of the overall reinsurance market and the trend is also exacerbated by the asset class still being treated as alternative, according to ILS market investors.

The discussion on ILS investment market fees took place during a roundtable debate moderated by Clear Path Analysis, which was documented in the firms latest ILS report.

The roundtable featured panelists Eveline Takken, Investment Director, Credit & Insurance-Linked Investments, PGGM, Philippe Trahan, Portfolio Director for ILS, Ontario Teachers’ Pension Plan and Bob Swarup, Principal, Camdor Global Advisors, all of which asserted that the level of fees charged by some ILS managers can be too high.

10 myths about parametric insurance

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In our last article “What is parametric insurance?” we established the basics of what a parametric insurance solution is – its key attributes, how it works and what makes it different from a traditional insurance solution.

However, we often hear a number of misconceptions about parametric or index based insurance solutions. In this article, we wanted to set the facts straight about the top 10 myths that we often come across when presenting parametric insurance solutions to clients.