Survey finds 18% of re/insurers hold investments in ILS

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A recent survey of 200 Chief Investment Officers (CIO’s) and investment team members from the life, property and casualty, insurance and reinsurance sector found that 18% of respondents are already holding some insurance-linked securities (ILS) within their investment portfolios.

The survey undertaken by Natixis looked at what is driving insurance and reinsurance investment teams strategies and the challenges they are currently facing in the macro investment environment.

Yield is clearly a challenge right now and continues to be, with no sign of a turnaround and re/insurer investment teams constantly battling to make up ground in this low yield environment.

Philippines cat bond illustrates Singapore – World Bank alignment on ILS

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Singapore and the World Bank aligned their missions to collaborate on the recent landmark first catastrophe bond issuance for the Philippines, as the pair look to stimulate insurance-linked securities (ILS) issuance in Asia as a financial solution for climate resilience.

The Philippines catastrophe bond, IBRD CAR 123-124 which completed last week to provide the country $225 million of disaster insurance capacity covering certain earthquake and cyclone losses, is the first from an Asian sovereign sponsor, the first to be listed in Asia and the first cat bond notes listed on the Singapore Exchange (SGX).

Asia and its people suffer around one-third of the world’s natural catastrophes each year, with significant impacts to the economy, as well as lives and livelihoods.

World Bank completes issuance of Philippines first catastrophe bond

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The World Bank has now successfully completed the issuance of the first catastrophe bond to benefit the Philippines with a source of capital markets backed disaster insurance, as the $225 million IBRD CAR 123-124 cat bond transaction listed on the Singapore Exchange (SGX) this morning.

The Philippines cat bond transaction has achieved a number of firsts, being the first time an Asian sovereign has sponsored a catastrophe bond transaction, the first cat bond notes listed on the Singapore Exchange and the first time the World Bank has elected to list a security of any type there.

The Philippines catastrophe bond has been long-awaited, as discussions have been ongoing between the countries government and the World Bank since at least 2010, when we first wrote about the potential for the country to become a beneficiary of catastrophe bond backed disaster risk financing and insurance.

Philippines cat bond will be first to list on Singapore Stock Exchange

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The inaugural catastrophe bond to benefit the Philippines will also set another ILS market first, as the $225 million of notes issued through the World Bank’s IBRD CAR 123-124 cat bond transaction will be listed on the Singapore Stock Exchange (SGX).

We understand that this will be the first listing of catastrophe bond or insurance-linked securities (ILS) notes on the Singapore Stock Exchange (SGX), since it began offering listing services alongside the Singapore ILS grant program.

It’s even more noteworthy given that the first ILS listing on the SGX is a cat bond transaction from an international issuer, rather than one issued using a Singapore domiciled ILS structure.

UNICEF looks to catastrophe bonds as post-disaster funding structures

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Catastrophe bonds continue to gain traction as a potential capital structure for delivering post-disaster financing or funding for international humanitarian and development organisations, with the United Nations agency UNICEF among the latest to explore insurance-linked securities (ILS).

Forward-looking agencies and humanitarian organisations are exploring the cat bond as a way to deliver new sources of funding linked to climate and disaster related experience, in the hope of closing existing funding gaps and also identifying ways to disburse capital much more rapidly after humanitarian crises occur.

Often reliant on donor funding and cash from parent organisations, humanitarian and international development organisations have struggled in the past to get the capital into disaster zones quickly enough. It’s thought that the faster the cash can be distributed to people, governments and non-governmental organisations on the ground, the greater its impact can be.

Cat bond sponsors continue to look to Bermuda for listings: Estera

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Foreign sponsors of insurance-linked securities (ILS) transactions such as catastrophe bonds continue to look to Bermuda as the location for listing the resulting notes, with Estera having listed all of the transactions originating in Europe or the UK this year.

The team at Estera, a global provider of corporate, fund, trust and legal services, including to reinsurance and insurance-linked securities (ILS) markets, has now acted on behalf of an impressive 55% of all ILS transactions listed on the Bermuda Stock Exchange (BSX).

The latest deal Estera has acted on and that has listed on the BSX is Covea Group’s recently completed €120 million Hexagon II Reinsurance DAC (Series 2019-1) catastrophe bond transaction.

ILW demand rising, prices could soar for Japanese wind triggers

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Indicative pricing for Japanese wind exposed industry-loss warranty (ILW) backed retrocessional reinsurance protection have risen significantly in response to the now consecutive years of heavy Japan typhoon losses, as well as nervousness over where current loss estimates will be finalised.

At the same time, we’re told demand for ILW capacity covering U.S. perils is up significantly in advance of the January reinsurance renewals, as a number of major players look to all natural peril coverage in index trigger form as a way to augment their retrocession programs.

With the retro market again impacted by losses and trapped collateral in 2019, resulting in a capacity crunch, we understand that there is significant demand building for retro aggregate products that may not be satisfied at 1/1, given the expectation retro capacity could be limited.

APEC reaffirms commitment to capital market backed disaster risk transfer

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At a recent meeting of the Asia-Pacific Economic Cooperation (APEC) finance ministers the group reaffirmed their commitment to exploring capital market backed disaster risk transfer tools, as well as other forms of insurance or reinsurance.

Representatives from the 21 member economies of the Asia-Pacific Economic Cooperation (APEC) meet regularly to discuss issues of relevance and ways they can work together to achieve synergies, or to benefit the group.

One of the topics of regular discussion is disaster risk financing, with the group of countries aware of the opportunity to pool their risks, benefit from diversification of the pool and more efficient access to insurance, reinsurance and other sources of risk capital.

The APEC Finance Ministers’ process sees the group convening alongside central banks from the region, to discuss shared experience and how to work better together.

Public sector demand, ESG qualities support ILS growth: HSBC’s Hoekema, Goonewardene

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The ongoing expansion of the insurance-linked securities (ILS) asset class is increasingly supported by government and NGO activity, while investors take advantage of a compelling ESG proposition, according to Andries Hoekema, HSBC Global Asset Management and Helen Goonewardene, HSBC Issuer Services.

Surpassing $90 billion in 2018, the ILS market has continued, albeit at a slower pace, to expand in spite of the costly impacts of recent catastrophe events.

Investor appetite for catastrophe risk remains and while the sophisticated investor base was reminded that losses are an eventuality in the risk transfer space, the market continues to reach new heights.

Oxbridge Re’s sidecar avoids impact from 2019 catastrophes so far

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The Oxbridge Re NS Ltd. fully collateralized reinsurance sidecar vehicle sponsored by Cayman Islands based reinsurance firm Oxbridge Re Ltd. has avoided losses from all of the recent global catastrophe loss events.

The Oxbridge Re NS quota share reinsurance sidecar has managed to avoid any impact from events including the Japanese typhoons right up to the most recent Hagibis, while also avoiding any losses from hurricane Dorian during Q3 as well.

Oxbridge Re reported its third-quarter results yesterday and revealed that the company got through the period with a loss ratio of zero, as none of the catastrophe events occurring in the period affected its underwriting portfolio.