Kazakhstan: Almaty nonchalant over earthquake fears

As Kazakhstan awaits the Big One, its seismologists are underfunded while ever-taller buildings rise in the earthquake-prone commercial capital.

Nur-Sultan may be cold and windy, but at least earthquakes aren’t a concern.

That was Andrei Krasilnikov’s thought when he moved to the capital from Kazakhstan’s mountain-fringed business metropolis, Almaty.

“It was a shame to have to leave our hometown. We have beautiful mountains there, which we don’t have here,” Krasilnikov, an activist opposed to the rapid spread of high-rise construction, told Eurasianet. “But Almaty is in a seismic zone, and I want to live in peace and not have to worry about my family.”

By way of an example, Krasilnikov points to a recently unveiled project to build several dozen 17-story apartment blocks in a tightly packed residential area of Almaty.

“These kinds of ghettos will become a mass grave if there is a powerful earthquake, since rescue equipment will not even be able to drive up through the rubble,” the activist said.

The fears are not without basis. Almaty is in a seismically active region. Mild tremors are fairly common. And seismologists are predicting that a powerful tremor could occur within the coming decade.

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Jamaica catastrophe bond grant agreements signed, deal imminent

The project to issue a first catastrophe bond to benefit Jamaica has made further progress this month, with an important grant approval now received and the World Bank facilitated cat bond deal launch now imminent.

Of course, any regular Artemis readers will know that this World Bank project to issue a sovereign catastrophe bond for Jamaica has been underway for a number of years.

In fact, we first wrote about formalised work that had begun between the World Bank and the Jamaican government on a possible catastrophe bond issuance almost three years ago.

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Greater Bay Re registered for China Re cat bond in Hong Kong

We’ve learned that the first company destined to be an insurance-linked securities (ILS) special purpose vehicle has already been registered in Hong Kong, with Greater Bay Re Limited established to issue a catastrophe bond on behalf of China Re, sources told us.

It’s an important sign of the state of readiness of Hong Kong’s legislative and regulatory framework for insurance-linked securities (ILS), showing that the Special Administrative Region is now ready for ILS activity and to become a domicile for catastrophe bonds.

The sponsor is also particularly noteworthy, as we’re told it will be China Property and Casualty Reinsurance Company Ltd. (China Re P&C), part of China Reinsurance Corporation, one of the largest insurance and reinsurance companies in China, but also with a global footprint thanks to operations in Lloyd’s of London and Singapore, as well as offices in Hong Kong and New York.

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Weather disasters displace more people than any other factor globally in 2020

A new report shows that weather related disasters were the primary driver of displaced people in 2020, with almost three-quarters of people internally displaced affected by weather, with storms and flooding the primary peril drivers of this.

In 2020 alone, some 40.5 million people were internally displaced within their own countries, with conflict and violence the cause of just over one-quarter and weather the rest.

Geophysical natural disasters were also a cause of displacement, with 655,000 people internally displaced by earthquakes and volcanic eruptions during the year.

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Generali hails completion of the first green catastrophe bond

Italian and global insurance giant Assicurazioni Generali S.p.A. has hailed the successful completion of its first green catastrophe bond issuance, the EUR 200 million Lion III Re DAC transaction.

The deal was launched to the cat bond investor community earlier this month, and benefiting from strong investor demand Generali secured it at attractive pricing, as we’d previously explained.

The company said today that the EUR 200 million cat bond, which is exposed to windstorms in Europe and earthquakes in Italy, is “the first ever ILS issuance that embeds innovative green features in compliance with the Generali Green ILS Framework.”

FULL ORIGINAL PUBLICATION HERE

Hong Kong publishes special purpose insurer (SPI) application guidelines

The Hong Kong Insurance Authority has today published guidelines related to its new insurance-linked securities (ILS) regulatory framework in the Government Gazette, with details on applications to establish special purpose insurers (SPI) in the domicile now finalised.

Hong Kong’s “Guideline on Application for Authorization to Carry On Special Purpose Business (GL 33)” is a comprehensive document that takes the completed legislation and turns it into something more usable, by making it relevant to those looking to apply to establish ILS structures in the Special Administrative Region (SAR).

Hong Kong’s readiness for ILS is now complete and with its pilot ILS grant scheme also available, alongside this guide for issuers and managers that helps in applying to operate ILS structures there, it may only be a matter of time until the first deal emerges.

FULL ORIGINAL PUBLICATION HERE

World Bank climate change plan highlights cat bonds & risk transfer

This week, the World Bank Group announced its new Climate Change Action Plan, with a range of commitments to ramp up and deliver record levels of climate finance, while catastrophe bonds, disaster risk financing and insurance against climate risk are also mentioned

Through its new Climate Change Action Plan, the World Bank is targeting the delivery of record levels of climate financing to developing countries.

At the same time the World Bank aims to work to reduce emissions, strengthen adaptation and align financial flows within the work it does with the goals of the Paris Agreement on climate change.

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Cat bond activity may give multi-strategy funds room to expand

The acceleration of activity in the global catastrophe bond market over the last few months could now drive an opportunity for a number of multi-strategy investment funds to expand, as the availability of paper has increased even causing some investment managers to lift the shutters on closed funds, we understand.

Which could drive more capital to look at catastrophe bonds and perhaps other insurance-linked securities (ILS), or the more structured collateralised reinsurance opportunities such as sidecars.

Given a lot of the multi-strategy investment funds that look at cat bonds and other ILS are open to retail money as well, these investment managers would really like to see listed opportunities, or assets with greater liquidity, which could even drive interest among specialist ILS managers or reinsurance firms to revisit the listed fund strategy again.

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Global insurance protection gap hit $1.4 trillion high in 2020: Swiss Re

The global insurance protection gap, or the gap between economic losses and those that are insured, widened in 2020 as pandemic related effects drove global macroeconomic resilience to decline by 18%, according to a measure by reinsurance firm Swiss Re.

Swiss Re Institute has published its Resilience Index, which shows that the COVID-19 pandemic reduced global macroeconomic resilience by close to a fifth in 2020.

Global economic growth is expected to recover strongly in 2021, after the pandemic-induced recession in 2020, thee reinsurance firm said, which it expects will help to build macroeconomic resilience again.

However, Swiss Re warns that “there will not be a return to pre-COVID-19 levels of resilience in 2021.”

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UCITS cat bond funds growing fast. Schroders overtakes GAM as largest

UCITS catastrophe bond funds as a group have increased their assets significantly over the last year, with accelerated growth of the cat bond market and rising interest in ILS investments helping to propel the UCITS cat bond funds we track to asset growth of roughly 58% in just one year.

Over that period, first place position for the largest UCITS cat bond fund has also changed, as Schroders has now overtaken GAM, after Schroders’ GAIA Cat Bond Fund overtook the GAM Star CAT Bond Fund (which is portfolio managed by Fermat Capital Management) in terms of assets held within the strategy.

At the end of May 2020, a group of 15 main UCITS cat bond funds had accumulated catastrophe bond assets of just over US $5.1 billion.

By the end of May 2021, just one year later, that figure had grown considerably, with the same 15 UCITS cat bond funds counting some US $8.05 billion of cat bond assets under their management.

FULL ORIGINAL PUBLICATION HERE