Alphabet’s (Google’s) first catastrophe bond priced on-target at $237.5m

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The first catastrophe bond to be sponsored directly for the benefit of Alphabet, Inc., the holding company for Google and its many units, has now been priced on-target at the mid-point of guidance, while the Phoenician Re Ltd. (Series 2020-1)  cat bond transaction will close at the same $237.5 million size it launched at.

Alphabet, which acts as a holding company for all of the Google tech operations, entered the catastrophe bond market for the first time earlier this month, seeking a capital markets backed solution to secure more earthquake insurance protection for its assets in the state of California.

The technology giants, such as Google, Amazon, Facebook and Microsoft, among others, all carry significant exposure to catastrophe, severe weather and climate risks on their books.

Singapore Gov calls for catastrophe bond cooperation with China

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China’s western region and in particular the municipality of Chongqing with its population of over 31 million, which includes the megacity of the same name, could benefit from cooperation on topics such as disaster insurance, with catastrophe bonds seen as an opportunity, according to the Singapore government’s Monetary Authority.

Speaking at the 3rd Singapore-China (Chongqing) Connectivity Initiative (CCI) Financial Summit this week, Ravi Menon, Managing Director at the Monetary Authority of Singapore highlighted disaster risk insurance and reinsurance as a key area for the two countries to cooperate on.

Singapore has opened its financial market to catastrophe bonds and insurance-linked securities (ILS) in recent years, successfully supporting nine catastrophe bond issues since early 2019.

Briefing – ILS: resilience despite the thrills

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Institutional investors have piled into insurance-linked securities (ILS) with the goal of adding reliable returns and a touch of diversification to their investment strategies. 

  • A series of natural catastrophes has made investors more aware of the risks embodied in insurance-linked securities
  • ILS have proven less liquid than expected in the wake of these disasters
  • Catastrophe bonds are the most traditional and most liquid ILS instrument

A series of natural catastrophes that hit the world in the past three years has taught them that they have incorporated the potential for large losses into their portfolios.

A relatively young asset class, ILS investments have been put to test since the summer of 2017, as a destructive series of hurricanes, earthquakes, floods and wildfires shot insurance losses through the roof. They also affected investments that, to some extent, constitute a bet that catastrophic events will not happen, or at least will not be too severe in terms of property destruction.

Growing flood gap a “catalyst” for ILS: Franklin Templeton

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Global investment firm Franklin Templeton has released a new report that examines the growing role of insurance-linked securities (ILS) in alleviating flood risk, particularly in the US where the financial burden on FEMA and the Treasury seems to be increasing every year.

Penned by Jonathan Malawer, Head of ILS, Commodities & Environmental Strategies at Franklin Templeton’s K2 Advisors business, the report notes that ILS and catastrophe bonds are gaining traction globally as potential solutions to the financial risk posed by flooding.

Specifically, Malawer notes that the appetite for alternative ways to transfer flood risk is growing in response to the increasing frequency and severity of flood events.

The Case for Deploying Enterprise Architecture in ILS

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Does innovation receive the attention it deserves in your company? Are you able to scale your business? Do you have business ideas but don’t see how IT can support or enable them? If so, this article is definitely for you!

ILS managers are technology companies that happen to work at the intersection of (re)insurance and capital markets. Such a statement is increasingly adopted by companies seeing innovation as a key driver of their comparative advantage. Whether this involves creating new business products or business models, innovation and technology must be central to strategy and managed as a fundamental capability.

To gain such a competitive edge, ILS managers need a front-footed, strategically aligned innovation and technology organization. In reality, however, many lack such an organization, and experience significant challenges in their IT architecture that detract from the desired strategy instead of reinforcing or even shaping it. What is needed is the capability to manage the company’s IT assets and drive the discovery and adoption of innovative solutions that advance the business strategy.

Falling gov bond yields make ILS an even more valuable diversifier: Schroders

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The value of insurance-linked securities (ILS) as a diversification play within asset portfolios is now even higher, as falling government bond yields have made other diversifiers less attractive at a time when ILS is only increasing its value proposition to investors.

This is according to Stephan Ruoff, Head of specialist insurance-linked securities (ILS) and reinsurance investing firm Schroder Secquaero and Brad Angle, Alternatives Director at global asset manager Schroders, in a recent paper.

The response of Central Banks to the COVID-19 pandemic has driven a divergence in the fortunes of some alternative asset classes known typically as offering portfolio diversification.

Cat bond market benefiting from a “flight to simplicity” in ILS

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The flight to quality in the insurance-linked securities (ILS) market has been well-documented, as some investors have opted to shift allegiance to ILS fund managers that are deemed higher quality, due to their longevity, track-records, or affiliations.

But now we can add to that a “flight to simplicity”, coined by RenaissanceRe CEO Kevin O’Donnell recently, specifically referring to the catastrophe bond market.

Together, quality and simplicity cover a lot of the bases that institutional investors are seeking within the ILS asset class at this time.

Institutional quality, quality of the portfolio of risks invested in, quality of track-record, quality of process, strategy, documentation, reporting, terms and conditions, people and partnerships, amongst other factors.

Google parent Alphabet turns to cat bonds for earthquake insurance

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Alphabet, Inc., the holding company for Google and its many units, has entered the catastrophe bond market for the first time, as the technology giant seeks $237.5 million of earthquake insurance protection that will be fully collateralized through the issuance of a Phoenician Re Ltd. (Series 2020-1)  cat bond transaction to capital market investors.

The technology giants of this world all carry significant exposure to catastrophe, severe weather and climate risks and looking to the insurance-linked securities (ILS) market as a source of efficient capacity that can support their insurance needs is a natural step for companies so focused on innovation and efficiency.

Alphabet, which acts as a holding company for all of the Google tech operations, is looking to secure California earthquake protection from the capital markets, in a deal that will see the firm’s captive insurer ceding risk to a global reinsurance firm, that will in turn enter into a coverage agreement with a special purpose insurer (SPI) Phoenician Re Ltd. which will issue the cat bond notes to investors.

中国的“一带一路”倡议会将启动亚洲的保险连结证券

2020年11月5日 Intelligent Insurer 原始采访译文。

Phoenix CRetro首席执行官基里尔·萨符拉索夫(Kirill Savrassov)认为,中国的“一带一路”倡议中的国家在很大程度上没有保险的支持,但是会将受益于该地区引入的保险连结证券。

萨符拉索夫在SIRC 2020 Re-Mind之前举行的标题为“新住所,新风险,新结构:保险连结证券另一种演变”的Intelligent Insurer 的Re/insurance Lounge网络研讨会上讲话时,他强调了在这些国家中发生的巨灾事件会对“一带一路”倡议的效率造成更广泛的影响。

他指出:《在运输和关键基础设施方面,这些国家正在获得数十亿美元的投资,但仍未投保大型自然灾害的险》。

《保护这些关键基础设施不仅对这些国家而且对作为当地区域投资者的中国都非常有利。即使在哈萨克斯坦或乌兹别克斯坦发生轻微地震,也可能导致运输走廊被堵塞》。

China’s Belt and Road Initiative could kick-start ILS in Asia

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The countries of China’s Belt and Road Initiative (BRI) are largely unsupported by insurance and would benefit from the introduction of insurance-linked securities (ILS) into the region, according to Kirill Savrassov, chief executive of Phoenix CRetro.

Speaking in an Intelligent Insurer Re/insurance Lounge webinar titled “New domiciles, new risks, new structures: another evolution for ILS”, which took place ahead of SIRC 2020 Re-Mind, Savrassov highlighted how a cat event in one of those countries could cause wider repercussions for the delivery of the BRI.

“Those countries are receiving billions and billions of investment into their transport and critical infrastructure but remain uninsured and uncovered for large natural disasters,” he said.