Hannover Re cedes up to 32% of cats, 24% of COVID losses to retro in 2020

ARTEMIS: German reinsurance giant Hannover Re benefited from its retrocessional protections throughout 2020, potentially ceding almost one-third of natural catastrophe losses and 24% of its losses from the COVID-19 pandemic.

The reinsurer reported its full-year 2020 results this morning, revealing that large losses came in well above budget for its P&C reinsurance business due to the contribution of the pandemic.

Hannover Re reported almost EUR 1.6 billion of net major losses in 2020, 950.1 million of which was from the COVID-19 pandemic.

FULL ORIGINAL PUBLICATION HERE

Cat bonds: Structurally diversifying & primed for growth, says Neuberger Berman

FULL ORIGINAL PUBLICATION HERE. COPY OF THE FULL WHITE PAPER HERE.

Catastrophe bonds and insurance-linked securities are one of the “very few genuinely, structurally diversifying asset classes,” according to the Neuberger Berman Insurance-Linked Strategies team, who give the asset class a positive outlook for 2021.

Writing in a white paper, the Insurance-Linked Strategies team of global asset manager Neuberger Berman explain that they also believe catastrophe bonds remain attractively valued and as an asset class is set to continue growing.

Catastrophe bonds, among the ILS universe, are particularly attractive to institutional investors, given they enable access to the returns of “a fundamentally uncorrelated asset class (natural catastrophe risk) in a form that is typically more liquid than most reinsurance contracts and vehicles,” the Neuberger Berman ILS team states.

PCS calls for industry collaboration to expand ILS market remit

ORIGINAL PUBLICATION HERE

The insurance-linked securities (ILS) and collateralized reinsurance market, where alternative capital from institutional investors is utilised to back reinsurance risks, has reached a significant size. But further growth is possible, especially if the market comes together to target new areas of risk, according to Property Claim Services (PCS).

In a newly published manifesto PCS calls for a “reinsurance revolution,” saying that following the major catastrophes of 2017 and evidence that the ILS market was able to recover from them and trade forwards effectively, the time is right to look to new niches where its capacity can be deployed more meaningfully over time.

Страховые Ценные Бумаги: акцент на катастрофических рисках

ПЕРЕВОД ОРИГИНАЛЬНОЙ СТАТЬИ

Страховые ценные бумаги (ILS) – класс активов, связанных с катастрофическими событиями. Они обеспечивают элемент диверсификации для инвестиционных портфелей. Проще: обвал рынка инвестиций никак не связан с природной катастрофой.

Ключевые моменты

  • Страховые ценные бумаги могут быть привлекательной инвестицией, поскольку не связаны с другими классами активов;
  • Недавние ураганы в США увеличили мировой фокус на ILS;
  • В некоторых странах вопросы макроэкономической защиты зависят от уровня охвата страхованием (т.н. страхового проникновения);
  • Нет препятствий по которым ILS не могут предоставлять защиту не только гражданам и организациям, но и правительствам в целом;

Риски российской экономики оценили в квадриллион рублей (With more then 50% wear of infrastructure within Russian economy, Expert RA estimates underinsurance exposure of almost USD 17 trillion)

ORIGINAL PUBLICATION (IN RUSSIAN) HERE

Российская экономика с ее ветхой инфраструктурой подвержена существенным рискам, при этом в отличие от развитых стран в РФ они практически никак не застрахованы. В результате в случае форс-мажорных обстоятельств люди и бизнес несут безвозвратные потери.

К такому выводу приходят аналитики рейтингового агентства “Эксперт РА” в исследовании “Будущее страхового рынка: российская карта рисков”.

Общий объем незастрахованных рисков в целом по экономике превышает квадриллион рублей, говорит президент “Эксперт РА” Дмитрий Гришанков.

No longer alternative. ILS a partner to re/insurance: Bermuda Convergence

ORIGINAL PUBLICATION HERE

At the ILS Bermuda Convergence 2017 event held this week, industry leaders explained the vital role that insurance-linked securities (ILS) and collateralized sources of reinsurance play in global risk transfer markets, seeing it as a partner to the traditional forms of protection.

Held each year in Bermuda, the Convergence event brings together industry thought-leaders. In 2017 the discussion behind the scenes is all about the industry’s response to recent loss events and how it is managing its claims.

The test provided by the recent tragic impacts of severe hurricanes and earthquakes is the biggest that the ILS sector has faced. But the asset class is providing its capital support to insurer and reinsurer partners, which has helped the risk transfer sector to manage the burden of catastrophe losses more efficiently.

Alternative capital seen as 28% of reinsurance (~ $224bn) by 2021: EY

ORIGINAL PUBLICATION HERE

The growth of alternative capital in reinsurance, catastrophe bonds and insurance-linked securities (ILS) as a whole seems assured, but how fast it will grow remains uncertain and many factors could stimulate more rapid, or slower growth, but EY estimates it could make up 28% of reinsurance capital by 2021, or around $224 billion.

In fact this is a conservative estimate from EY, as the firm clearly feels that there is every chance ILS capacity could grow even faster over the coming years.

Others believe that traditional reinsurance and ILS capacity could be reaching more of an equilibrium point meaning the ILS sector needs to innovate to expand, in terms of share of the overall reinsurance market. But EY is bullish and anticipates that the ILS market will continue to find new avenues for growth and expansion.

Expectation of higher reinsurance rates is rising, especially retro

ORIGINAL PUBLICATION HERE

The expectation that reinsurance & ILS rates will increase at the forthcoming January renewals is rising, as execs in the sector digest losses they face and the impact of trapped ILS collateral. The highest rate rises are anticipated in retrocession markets, as a significant chunk of retro capacity is assumed to be either paying out or locked in.

As the ramifications of the recent catastrophe events and the aggregation of losses across them sinks in, an increasing number of calls for price increases are being heard, from both the traditional and alternative sides of the industry.

Among the quickest to call for rate increases were the ILS fund managers, many of whom immediately knew that they faced trapping of collateral and as a result expect to be able to earn a higher return on replacing it, or deploying new capacity raised from investors.

ILS & reinsurance equilibrium means innovation required: Frank Majors, Nephila Capital

ORIGINAL PUBLICATION HERE

To some extent, an equilibrium has been reached between alternative and traditional reinsurance capital, and further innovation is required if the insurance-linked securities (ILS) space is to continue growing, according to Frank Majors, co-founder and principal of the world’s largest ILS fund manager, Nephila Capital.

The alternative, or non-traditional reinsurance sector continues to expand in terms of size, claiming an increasingly larger slice of the overall reinsurance market pie, despite a notable slowdown in the entry of ILS capital in more recent times.

Established around two decades ago to cover the most remote, and peak exposures, the market has had a beneficial impact on the reinsurance and broader risk transfer sector, helping regions manage their peak risks that had been challenging to diversify, such as California and Florida, for example.

R&Q in bold £50mn capital raise

ORIGINAL PUBLICATION HERE

London-listed R&Q has unveiled a restructuring of its management team and raised £49.3mn this morning in a significant equity placing that will support its new focus on providing fronting services as well as its traditional legacy acquisitions.

R&Q – whose market capitalisation was circa £130mn before the announcement – will have around £47mn after fees to inject into two of its main operating subsidiaries: it’s US nationwide licenced insurer Accredited Surety & Casualty and its Malta-domiciled carrier, R&Q Insurance Malta.