UNDP makes case for ILS in Western Balkan disaster risk financing

ORIGINAL PUBLICATION HERE

The countries and territories of the Western Balkans region are highly vulnerable to the majority of natural catastrophe events, underlining the need for increased awareness of the capabilities of various sources of risk financing, including the catastrophe bond and insurance-linked securities (ILS) space.

International organisations, private sector companies and academia for countries and territories in the region recently participated in a workshop organised by the Climate and Disaster Team of UNDP Istanbul Regional Hub, UNDP Country Office in Bosnia and Herzegovina.

The Sub-Regional Workshop on Disaster Risk Reduction Financing was held on April 2nd 2019, in Bosnia and Herzegovina, and explored disaster risk financing in the regions, in light of increasing costs when disaster does strike.

The Western Balkans region is highly susceptible to earthquake risk, but also flooding, landslides, mudslides, debris flows, avalanches, droughts, and extreme temperatures. Earthquakes are the most hazardous, and often result in secondary events that can be equally, if not more damaging and costly than the actual quake itself, such as landslides and mudslides.

RMS updates U.S. hurricane, Asia quake models. Hires MD for Asia-Pac & Japan

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Catastrophe risk modelling specialist RMS has announced a raft of risk model updates, including to its U.S. hurricane model and Asia earthquake models, while also announcing a new Managing Director for Asia-Pacific and Japan.

RMS said that it is releasing updates to its view of hurricane risk across hurricane-impacted countries in the North Atlantic basin, as well as new views of earthquake risk in Taiwan, Indonesia, Philippines, Singapore, Malaysia, Thailand and Vietnam.

These catastrophe risk model updates incorporate RMS’ latest methodologies and take into account the firms latest research on hazard, vulnerability and financial modeling enhancements. All updates will be delivered on version 18.1 of RMS’ RiskLink and RiskBrowser risk management software.

RMS said it has added updates to long-term and medium-term hurricane event rates, new historical event reconstructions from recent hurricane seasons, and vulnerability enhancements informed by new data and RMS building research to its U.S. hurricane model.

Kazakhstan has turned into ‘competitive transit hub’, Nazarbayev tells Belt and Road forum

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NUR-SULTAN – Kazakhstan’s First President Nursultan Nazarbayev briefed the April 25-27 Belt and Road Forum for International Cooperation in Beijing on the country’s infrastructure development and transport potential.

“Over the past ten years, Kazakhstan has invested about $30 billion on infrastructure development, transport and logistics assets and competence. Almost 3,000 kilometres of national railways and 12,500 kilometres of highways have been modernised or put into operation. Domestic sea and air harbours were reconstructed. As a result, the country has turned into a modern and competitive transit hub,” he said.

The Western Europe – Western China intercontinental highway now connects Europe and China through Russia and Kazakhstan, noted Nazarbayev, adding the highway was completed through cooperation between the country’s Nurly Zhol Programme and the Silk Road Economic Belt.

China’s Belt and Road hits a speed bump in Kazakhstan

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‘Dry port’ pins its hopes on foreign investors to spur faster growth

A worker at Khorgos Gateway, which operates a container terminal on the border between Kazakhstan and China, directs a crane as it unloads steel coils from a container. (photo by Wataru Suzuki)

KHORGOS, Kazakhstan — One of the most ambitious projects in China’s Belt and Road Initiative aims to transform a vast plot of open land along China’s border with Kazakhstan into the launch point for a river of Chinese goods flowing to Europe by rail.

A depot hums with giant cranes, hoisting containers. Newly built rail lines stretch into the distance and hundreds of workers go about their jobs. The vision is taking shape. But just four years in, the project already faces slowing growth.

Big, Empty, But Full of Promise?

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The Great Stone industrial park outside Minsk currently feels like an empty monument to political ambition, but with increased involvement from Chinese investors and Beijing’s backing it still has potential. 

Flags branded with the China Merchants Group logo flutter along wide, empty roads as we make our way from the administrative headquarters towards Great Stone industrial park’s new trade and exhibition center. The center has a floorspace of 22,000 square meters, and is populated by a security guard who watches over an exhibit detailing the park’s most noteworthy resident companies. As we tour the exhibit, the park’s press secretary explains that the center will host an international economic forum later that year. Prompted perhaps by the cavernous exhibition space, she adds, “we’re just at the beginning of our journey here.”

Some commentators look at Great Stone, located just outside of Minsk and otherwise known as the China Belarus Industrial Park, and they see a bold idea struggling to convince investors. They talk about the personal interests of Belarus’ strongman leader, President Alexander Lukashenko, and describe a project that is more about ambition and politics than serious economic opportunity. The expensive-looking exhibition center certainly has a whiff of boondoggle about it, but, as with many projects undertaken by China, “big and empty,” always holds the uncertain promise of becoming “big and full.” During my visit to Great Stone, I asked employees whether the park was underachieving. The typical response was measured, yet believably candid: “It’s not as fast as we want, but, for such a huge process, it’s progressing at a good speed.” It doesn’t make for captivating headlines, but development is often slow—success a relative concept.

Alternative capital up, traditional down, as reinsurer profits shrink again

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Alternative reinsurance capital’s continued growth through 2018, as well as the slight shrinking of traditional reinsurer capital have been confirmed in a report out today, while at the same time profits at reinsurers are seen to have shrunk again, based on underlying returns on equity (ROE’s).

Total dedicated global reinsurance sector capital was measured at $462 billion at the end of 2018, according to Willis Re’s latest report.

Shareholder equity of the 32 reinsurance companies tracked in the firms Willis Reinsurance Index fell by 10% to $335.7 billion, a reversal from the growth of 8% seen in 2017.

But alternative reinsurance capital, so that employed by insurance-linked securities (ILS) funds, collateralized reinsurers and other capital markets backed structures, expanded by 6% to reach $93 billion at the end of 2018.

Red Cross making volcano cat bond progress

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The Danish Red Cross and International Federation of Red Cross and Crescent Societies are making progress with their first ever catastrophe bond transaction, revealing a tiered trigger structure designed to ensure that impactful volcanic eruptions cause the cat bond to pay out.

The international humanitarian movement announced last year that it was looking to the capital markets to issue the industry’s first pure-volcano catastrophe bond.

Operating in the humanitarian space means that the Red Cross and Red Crescent deals in extreme risks, seeing first-hand that when a region is affected by a disaster, it’s vital that capital is delivered quickly and effectively to support the best possible humanitarian response.

According to the Red Cross and Red Crescent, worldwide, 500 million people live near 1,500 active volcanoes. Furthermore, when an eruption does occur, even those that aren’t completely displaced can still experience significant financial, livelihood and human loss.

Protectionist trends a “significant barrier” for European re/insurers: Insurance Europe

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The use of protectionist measures in emerging countries remains a “significant barrier” to the ability of European re/insurers to place business in these regions, according to Insurance Europe.

In a recent report, the European insurance and reinsurance federation highlighted concerns about protectionist trends in a number of high growth potential markets.

For example, in Indonesia, Insurance Europe pointed to mandatory cession requirements, particularly in light of the establishment of Indonesia Re, as well as a worrying life insurance tax issue.

It claimed that local compulsory cessions diminish the possibility to diversify risk, creating high local exposure in the event of large losses, such as from natural disasters.

Утверждена стратегия по снижению риска стихийных бедствий

ОРИГИНАЛЬНАЯ ПУБЛИКАЦИЯ ЗДЕСЬ

Кабмин утвердил стратегию по снижению риска бедствий в Узбекистане, главная цель которой — защита населения и территорий от чрезвычайных ситуаций.

Кабинет Министров 12 апреля утвердил стратегию достижения целей «Сендайской рамочной программы по снижению риска бедствий на 2015−2030 годы» и национальный план по ее реализации, сообщила Norma.uz.

Цель стратегии — повышение эффективности реформ в сфере комплексной защиты населения и территорий от бедствий и существенное сокращение к 2030 году числа погибших и пострадавших, а также прямого экономического ущерба в результате бедствий.

Alternative capital growth to “regain momentum”, reaches $97bn in 2018: Aon

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Alternative sources of reinsurance capital, deployed into catastrophe bonds as well as through ILS funds and other collateralized vehicles, grew by a slower 9% to $97 billion in 2018, but is expected to “regain momentum” in the coming months, according to Aon.

Alternative reinsurance capital had been rising by more than 10% every year since 2008, but in 2018 this slowed down to 9%, as alternative capital reached $97 billion at the end of the year, up from $89 billion at the end of 2017.

The impact of major catastrophe losses was beginning to bite and slowed the raising of alternative and ILS capital, but this also hit traditional reinsurers, according to broker Aon, as the broker reports that traditional reinsurance capital shrank by more than 5% during 2018, falling from $516 billion to $488 billion.

Global reinsurance capital 2018