Diversification drives ILS investor allocations more than returns


Investor allocations to the insurance-linked securities (ILS) and reinsurance linked investments space are driven more by the diversification and relative lack of correlation than by the absolute returns achievable, according to a survey.

Investors cited the diversification benefits of the ILS asset class, so insurance and reinsurance linked investments, as the main attraction and driver for investing in the space, according to responses to a recent survey run by Willis Towers Watson (WTW).

The survey overall shows that enthusiasm for ILS both as investment and efficient form of reinsurance or retrocessional protection remains strong, that ILS is seen as a positive component of the global risk transfer market and that continued growth of ILS is expected.

Alternative investments to expand to $14tn by 2023, niches to benefit


The alternative investments sector is forecast to see explosive growth over the coming five years, with alternative assets under management, consisting of private capital and hedge funds, likely to reach $14 trillion by 2023.

According to Preqin, a tracker of data on the alternative asset management space, the industry held $8.8 billion of assets in 2017 and this is now forecast to expand by 59% over the next five years, representing compound annual growth of 8.0% per annum.

Within this explosive growth one of the big areas expected to benefit from increasing investor interest and appetite in alternatives is the so-called niche or esoteric strategies, which is where insurance-linked securities (ILS), catastrophe bonds and other reinsurance linked investments sit.

Asia: Insurance gap in the region grows to US$134bn – Lloyd’s


The underinsurance gap in Asian countries has widened by 9.4% to $134bn today from $122.5bn in 2012, according to new research from Lloyd’s, the world’s specialist insurance and reinsurance market, and the independent consultancy Centre for Economics and Business Research (CEBR).

The Lloyd’s Underinsurance Report 2018 says that globally, an estimated $163bn of assets are underinsured in the world today. In 2012, the first edition of the global report revealed $168bn in underinsured assets globally.

Swiss Re eyes growth in Europe


The protection gap in Europe remains large in many countries—but this is where growth can be generated for reinsurers as governments look to solve this challenge, as Claudia Cordioli of Swiss Re tells Baden-Baden Today.

There is plenty of growth opportunity in Europe for the re/insurance sector as certain governments are warming up to the idea of cooperating with the private sector to offer catastrophe risk solutions to their populations, according to Claudia Cordioli, head of reinsurance for Western & Southern Europe at Swiss Re.

Closing the insurance gap needs capital market support: Lloyd’s


In order to close the insurance protection gap the world’s oldest insurance and reinsurance market, Lloyd’s of London, says that capital market investment, channeled through insurance-linked instruments, is going to be a key tool to help achieve this.

Lloyd’s notes in a release today that efforts to close the disaster protection gap are not going well, with an estimated $163 billion of assets left underinsured in the world today and this gap having only closed by less than 3% in the last six years.

You’d think that Lloyd’s would be extolling the virtues of its marketplace and traditional insurance and reinsurance syndicates, as the mechanism for closing these gaps.

OppenheimerFunds acquired by Invesco, creates $1.2 trillion asset manager


OppenheimerFunds, Inc, the investment manager that operates a catastrophe bond strategy and is in the process of launching an insurance-linked securities (ILS) interval mutual fund, is being acquired by investment giant Invesco, with the combined entity set to be a $1.2 trillion powerhouse in asset management.

Invesco is effectively acquiring OppenheimerFunds from current owner insurer MassMutual, with MassMutual set to become a significant shareholder in Invesco after the event and the pair looking to explore new synergies to work more closely together.

Параметрические катастрофические облигации лучший вариант


Параметрические катастрофические облигации могут помочь странам Юго-восточной Европы, Центральной Азии, Кавказа, Содружества Независимых Государств и Турции (ECIS) справится с недострахованностью катастрофических рисков, сказал Baden-Baden Today Кирилл Саврасов, CEO Phoenix CRetro, Бермудской компании, специализирующейся в Страховых Ценных Бумагах (ILS) .

“С низким охватом страхованием (менее 2%), перестраховочным протекционизмом и растущими последствиями изменения климата, странам ECIS действительно необходимо обратить внимание на трансфер риска стихийных бедствий с использованием всех доступных альтернативных инструментов, и однозначно, рынку Страховых Ценных Бумаг здесь есть что предложить,» говорит Саврасов.

‘Insurance gap’ threatens disaster-vulnerable poor nations: Lloyd’s


BARCELONA (Thomson Reuters Foundation) – Disaster-prone developing nations, including Bangladesh and Indonesia, are exposed to crippling losses when storms, floods or earthquakes strike because they suffer from a dangerous lack of insurance, industry experts said on Monday.

Globally, assets worth about $163 billion are not insured against catastrophes, posing a “significant threat” to livelihoods and prosperity, London-based insurance market Lloyd’s said in a report.

The value of “underinsured” assets has shrunk by only 3 percent since 2012, it noted.

Parametric cat bonds the best option


Parametric cat bonds can help the countries of South Eastern Europe, Central Asia, Caucasus, The Commonwealth of Independent States as well as Turkey (ECIS) cope with the protection gap in natural catastrophe risk, Kirill Savrassov, CEO of Phoenix CRetro, a niche Bermudian ILS specialist, told Baden-Baden Today.

“With low insurance penetration (less than 2 percent), reinsurance protectionism and growing climate change consequences, the countries of ECIS region really need to address disaster risk transfer with the use of all available alternative instruments and that is where ILS market definitely has something to offer,” said Savrassov.

He noted that the region has historically been home to a number of risk, with earthquakes being the most devastating. Between 2005 to 2014, the region suffered 314 natural disasters event affecting over 11 million people and causing over 60,000 deaths.

ILS investors, funds, buyers all now regard ILS as mainstream: Willis report


End investors, ILS funds, and buyers – the three groups active in ILS – have predominantly weathered 2017 loss activity with a view that reinsurance products backed by ‘alternative’ capital have become mainstream, according to a new Global ILS Market Survey by Willis Towers Watson.

The survey of all three constituents of the ILS market was conducted more than six months after the major 2017 losses. Responses are therefore informed by the crystallisation of ILS funds’ performance, the report noted.

Cedants and funds share the view that ILS will continue to grow, partly through increased usage, and partly by covering risks outside property catastrophe, such as property per-risk, cyber, and marine. Investors and cedants alike continue to show appetite for such transactions.