参数化主权巨灾债券是“一带一路”的保险方式

通过与“一带一路”倡议相关的项目获得中国投资的中亚和东欧国家,应使用参数化主权巨灾债券来确保自身免受自然灾害的风险。

这是保险连结证券(ILS)和主权风险转移专家基里尔·萨符拉索夫(Kirill Savrassov)的观点。

萨夫拉索夫指出:《中国的“一带一路”倡议对中亚和东欧的全面保护方案提出了更高的要求》。

《中国将数百亿美元投入了该地区的基础设施建设,但实际上,其中连一个项目也没适当地投保物理伤害的险,尽管该地区面临着地震和其他自然灾害的高风险》。

在乌兹别克斯坦,哈萨克斯坦或塔吉克斯坦等国家,问题不是地震是否要发生,而是何时要发生,并且其毁灭力量多大。

自然灾害会破坏中国通过“一带一路”倡议帮助该地区发展的许多基础设施项目。如果建造后这种项目因地震而摧毁,那么东道国仍将欠缴中国的贷款,但是不会从基础设施投资中获取收益。

FULL PUBLICATION HERE

Collateralized reinsurance renewals firmer than cat bonds or ILW’s

While the catastrophe bond market has been first to experience investor-demand and capacity driven softening, as spreads have increasingly tightened on primary issues over recent months, this isn’t yet reading across to the entire collateralized reinsurance market at the mid-year renewal season, we’re told.

2021 has seen a significant upwell in demand from investors for new catastrophe bond investments, which has driven strong execution and keen pricing to the benefit of sponsors, but resulted in year-on-year softening in that market.

As we’ve been explaining over recent weeks, spread tightening in the catastrophe bond issuance market has now driven multiples to levels last seen in 2019.

This softening of cat bond rates has also spilled over into the industry-loss warranty (ILW) market as well.

FULL ORIGINAL PUBLICATION HERE

Bill reintroduced calling for more NFIP flood reinsurance & cat bonds

A bill has been reintroduced to the United States Congress that again calls on lawmakers to codify that Federal Emergency Management Agency (FEMA), as the administrator of the U.S. National Flood Insurance Program (NFIP), sets a PML target each year and buys reinsurance and capital market risk transfer solutions accordingly.

The Taxpayer Exposure Mitigation Act is one of four bills reintroduced by Congressman Rep. Blaine Luetkemeyer of Missouri and focuses solely on mandating use of risk capital to support the NFIP’s financing needs, de-risk it and enable it to pay its claims.

Efforts to enshrine in law a requirement for the NFIP to be de-risked with the help of the private reinsurance and capital markets have been underway some years, but so far these efforts have failed to gain the necessary support, or have been sidelined as other legislative issues took precedence.

FULL ORIGINAL PUBLICATION HERE

Catastrophe bond & related ILS set for record $10bn+ H1 in 2021

Issuance of new catastrophe bonds and other related insurance-linked securities (ILS) we track here at Artemis is now set to break new ground for the first-half of 2021, with more than $10 billion of issuance now anticipated, according to our latest data on the market.

The total issuance we’ve tracked so far this year that has already completed and settled, across property catastrophe bonds, other line-of-business cat bonds, private cat bonds and also mortgage insurance-linked securities (ILS), has already reached more than $9 billion.

Almost $5.6 billion of the total issued so far and tracked by us at Artemis represents pure Rule 144A property catastrophe bonds.

FULL ORIGINAL PUBLICATION HERE

TWIA to double Alamo Re 2021 cat bond to $500m

The Texas Windstorm Insurance Association (TWIA) is now expected to double in size its new Alamo Re Ltd. (Series 2021-1) catastrophe bond transaction, which will now more than replace a soon to mature $400 million cat bond from 2018.

As we were first to report this week, TWIA’s staff said at a meeting on Wednesday that the new cat bond could be upsized, depending on the investor reception to the deal and resulting market pricing.

TWIA returned to the catastrophe bond market for this new Alamo Re 2021 catastrophe bond just over one week ago, at which time it was seeking just $250 million of reinsurance with the issuance.

FULL ORIGINAL PUBLICATION HERE

Industry-loss warranty (ILW) market softens YoY as capacity rises

Following conversations with a number of market sources, it seems that the market for industry-loss warranty (ILW) protection has softened year-on-year, following on the heels of the catastrophe bond market as capacity turns its attention to ILW’s in the run up to the renewals.

Just the other day we explained that indicative pricing for industry-loss warranties (ILW’s) has jumped higher year-on-year, but it turns out this is just broker pricing sheets catching up to more realistic pricing levels after many had been indicating rates that were far too low a year ago.

That caused a number of contacts in the ILW capacity providing and broking market to reach out, to provide some colour on where pricing actually sits in 2021.

FULL ORIGINAL PUBLICATION HERE

Credit Suisse: Cushioning the impact of climate change with cat bonds.

More powerful hurricanes and increasing numbers of earthquakes – climate change is real. What does climate change mean for the alignment of investment portfolios? Investments in cat bonds offer institutional investors interesting opportunities to help shape the future.

Climate change is jeopardizing the creditworthiness of government bonds

“Over the past three decades, there has not been a single year when the average temperature in Switzerland was less than the average,” says Prof. David N. Bresch, Professor for Weather and Climate Risks at the Swiss Federal Institute of Technology Zurich, at Credit Suisse’s EAM thought leadership event. He is drawing attention here to ongoing climate change and the fact that the greenhouse effect needs to be limited to a considerable extent if the goal of the Paris Agreement on climate change to restrict global warming to well below two degrees by 2050 is to be achieved.

Because every degree of temperature rise leads to a 7% increase in humidity. As a result, there is a greater probability of tropical cyclones and hurricanes. An increased probability of natural disasters can in turn impact the creditworthiness of government bonds if national budgets face the additional burden of major loss events. “Countries in exposed regions must practice good risk management in order to secure their creditworthiness in the long term,” says Prof. Bresch.

FULL ORIGINAL PUBLICATION HERE

TWIA returns for $250m+ Alamo Re cat bond renewal for 2021

The Texas Windstorm Insurance Association (TWIA) has returned to the catastrophe bond market with a $250 million or larger Alamo Re Ltd. (Series 2021-1) transaction, which will go at least some of the way to renewing a soon to mature $400 million cat bond from 2018.

For 2021, the Texas Windstorm Insurance Association (TWIA)  has returned to Bermuda as the home for this catastrophe bond issuance, having ventured to Singapore for its only cat bond of 2020.

The residual market property insurer for the State of Texas has now sponsored six catastrophe bonds, with this 2021 Alamo Re issuance set to be the firms seventh.

In total, the six previously sponsored cat bonds have provided TWIA with $2.5 billion of fully-collateralized reinsurance from the capital markets.

FULL ORIGINAL PUBLICATION HERE

Florida ILW price indications up as much as 50% year-on-year

With the Florida reinsurance renewals fast approaching, it’s interesting to learn that indicative pricing for industry-loss warranty (ILW) protection covering hurricanes affecting the state is up significantly year-on-year, but actual market pricing may be flat or even down. Please read our update at the foot of this article.

The market for typically retrocessional reinsurance protection structured in industry loss warranty (ILW) form has been one of the areas that saw a contraction of available capacity and then hardening over the last few years, but the hardening actually seems to have been more significant through the second half of 2020 and into 2021 than it had been after the loss heavy Florida hurricane year’s of 2017 and 2018.

The ILW market has been cited as one area of reinsurance where attractive return opportunities exist this year and broker pricing sheets seen by Artemis suggest those looking to back ILW’s with their capital are likely to secure better rates than a year ago.

FULL ORIGINAL PUBLICATION HERE

Surge in cat bond market set to continue in 2021

The catastrophe bond market saw robust activity last year as new sponsors and tightening retrocessional reinsurance capacity helped buoy the sector, and the trend is expected to continue.

Both the 2020 top line issuance of $11 billion of property cat bond limit placed and the fourth-quarter total of $3.7 billion were records, according to a report released last week by Aon Securities, a unit of Aon PLC.

New sponsors helped drive cat bond activity in 2020, said Des Potter, a London-based managing director at GC Securities, part of Guy Carpenter & Co. LLC.

FULL ORIGINAL PUBLICATION HERE