Has the time come for Indian CAT bonds?

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Excellent management of cyclone Fani by the eastern Indian state of Odisha has become a text book example of how to manage natural catastrophes although the government is now faced with the task of post-disaster reconstruction. With low insurance penetration, the question of using capital markets as a means of risk transfer merits attention.

‘How Do You Save a Million People From a Cyclone? Ask a Poor State in India’ – the headline in the New York Times of 3 May 2019 was very apt.

Indeed, Odisha, a poor eastern coastal state in India, home to about 42m as per 2011 census with an average income of less than $5 a day, was battered by an extremely severe cyclonic storm Fani on 3 May 2019, but Odisha’s management of the event has been hailed as a classic text-book example of how best to manage a natural disaster.

ILS market at “exciting inflection point” – John Seo, Fermat Capital Management

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Poised to reach new heights in the coming months on the back of bumper year’s of catastrophe bond issuance, the insurance-linked securities (ILS) market is at “an exciting inflection point,” says Co-founder and Managing Director of Fermat Capital Management, John Seo.

In spite of the impacts of the catastrophe events that occurred in 2017 and 2018, subsequent losses and issues of trapped collateral, the ILS market has continued to expand in recent times, albeit at a somewhat reduced pace when compared with previous years.

Reports on the overall size of the ILS market at the end of 2018 do vary. However, the general consensus from insurance and reinsurance brokers is that even with the inclusion of trapped collateral, the market grew once again in 2018, and is approaching the $100 billion mark.

As climate risks rise, insurance needed to protect development

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Less than 5 percent of disaster losses are covered by insurance in poorer countries, versus 50 percent in rich nations

Jan Kellett leads and coordinates UNDP’s external engagement on its disaster, climate and energy work. Astrid Zwick is head of the InsuResilience secretariat at Germany’s development agency, GIZ.

In February, the World Meteorological Organization confirmed the past four years as the warmest on record, and to underline the trend, they confirmed the 20 warmest years have all occurred within the last 22 years. These findings, along with those from the 1.5C report produced by the Intergovernmental Panel on Climate Change (IPCC), urging us to take drastic action, must be heeded – and heeded now.

Probably the most startling aspect of the IPCC report is how disproportionately climate change impacts on those already at a socio-economic disadvantage, and less equipped to deal with its effects. They include indigenous peoples and local communities that depend on agriculture and coastal livelihoods.

Climate change a factor in U.S. east coast hurricane threat: Researchers

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Climate change is a factor in the intensity of hurricanes that threaten to strike the east coast of the United States, according to researchers who say that CO2 and greenhouse gases are helping to diminish the wind shear that can act as a barrier to storms.

Wind shear along the U.S. east coast has long been attributed to being a factor that can help to diminish the power of hurricanes as they approach the seaboard, known to disrupt the structure of tropical storms and as a result lower the chances of them making an intense landfall.

The presence or otherwise of wind shear can dictate the direction hurricanes travel in, their ability to organise and intensify, the intensity they can reach, their size and other factors of relevance to insurance, reinsurance and ILS market interests.

Schroders hires new distribution lead for private assets, including ILS

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Global asset management group Schroders has announced the hire of a new distribution lead for its private assets unit, with Peter Arnold set to head up the Alternative Sales Unit which includes the firms insurance-linked securities (ILS) strategies.

Arnold, who joins Schroders from Citi Group, is an experienced senior private assets distribution lead, who most recently held the role of Global Head of International Fund Distribution at Citi. Before his time at Citi he worked at JP Morgan, UBS and Societe Generale.

In his recent role at Citi he specialised in private debt, real estate and global infrastructure, working on both the origination and distribution of third-party private assets strategies to global institutional investors.

Peru cat bond payout decision within 20 days: Minister of Finance

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The decision as to whether Peru’s earthquake exposed IBRD CAR 120 catastrophe bond will payout a portion of the investor principal is expected within 20 days of the magnitude 8.0 earthquake that struck Peru on Sunday 26th May, according to the country’s Finance Minister.

Carlos Oliva, the Minister for Finance and the Economy in the Peruvian government spoke yesterday about the earthquake and the fact that preliminary information suggests that the country will be due a payout of some of the parametric disaster insurance the World Bank issued IBRD CAR 120 catastrophe bond provides.

As we explained on Monday this week, the magnitude 8.0 earthquake struck Peru in a relatively sparsely populated area of the Amazon jungle. However, it was the most intense quake to strike the country in twelve years, with strong shaking was felt as far as 600 miles away from the epicentre and damage widely reported to homes, commercial buildings and infrastructure.

Peru cat bond payout decision within 20 days: Minister of Finance

FULL ORIGINAL PUBLICATION HERE

The decision as to whether Peru’s earthquake exposed IBRD CAR 120 catastrophe bond will payout a portion of the investor principal is expected within 20 days of the magnitude 8.0 earthquake that struck Peru on Sunday 26th May, according to the country’s Finance Minister.

Carlos Oliva, the Minister for Finance and the Economy in the Peruvian government spoke yesterday about the earthquake and the fact that preliminary information suggests that the country will be due a payout of some of the parametric disaster insurance the World Bank issued IBRD CAR 120 catastrophe bond provides.

As we explained on Monday this week, the magnitude 8.0 earthquake struck Peru in a relatively sparsely populated area of the Amazon jungle. However, it was the most intense quake to strike the country in twelve years, with strong shaking was felt as far as 600 miles away from the epicentre and damage widely reported to homes, commercial buildings and infrastructure.

Swiss Re “excited” to promote Asian ILS market with First Coast Re II cat bond

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Global reinsurance firm Swiss Re said today that it is “excited” to promote the development of an insurance-linked securities (ILS) and catastrophe bond market in Asia, with the completion of the first cat bond it has facilitated in Singapore, the $100 million First Coast Re II Pte. Ltd. (Series 2019-1).

As we first revealed more than ten days ago, Florida based primary insurance company Security First became the first sponsor to benefit from a full Rule 144A catastrophe bond to be issued in Singapore.

The Security First Insurance Company sponsored catastrophe bond became the first 144A cat bond to be issued under the new ILS regulatory regime in Singapore, pipping another transaction, the Manatee Re III 2019-1 cat bond, to the post.

Peru’s World Bank cat bond could be triggered by M8.0 earthquake

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A magnitude 8.0 earthquake that struck Peru yesterday, Sunday 26th May, could trigger the IBRD CAR 120 catastrophe bond, which was part of the Pacific Alliance issuance, with the available data suggesting that a 30% loss of principal should be expected by investors in the cat bond.

The magnitude 8.0 earthquake struck Peru yesterday with the epicentre in a relatively sparsely populated area of the Amazon jungle, but it was the most intense quake to strike the country in twelve years, reports say, with damage quite widely reported to homes and commercial buildings.

Strong shaking was felt as far as 600 miles away from the epicentre, which was situated around 110 miles east of the town of Moyobamba, which is the capital of the San Martín region of north Peru.

First PCS triggered Japan ILW brokered by Willis Re

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Property Claim Services (PCS) industry loss data aggregation and index reporting services for non-marine catastrophe losses in Japan has already been used for an industry loss warranty (ILW).

We’ve learned that reinsurance broker Willis Re has become the first to structure and trade an industry loss triggered retrocessional risk transfer instrument using the still relatively new PCS Japan index as a trigger.

PCS launched its Japan focused industry loss data and index service in January of this year, as it responded to demand from its client base following the impacts of major catastrophe losses in 2018.