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.

FULL ORIGINAL PUBLICATION HERE

Cat bond growth propelled by strong investor demand: Moody’s

Moody’s has reported that the catastrophe bond market saw record issuance in 2020 despite a brief pause in Q2 following a particularly tumultuous period for the financial markets.

And looking ahead through 2021, the rating agency expects cat bond issuance to continue to grow with strong investor demand for the asset class, evidenced by a reduction in spreads and upsized deals seen over the last several quarters.

According to Moody’s future growth in the ILS market will likely be driven by pure cat bonds from traditional and non traditional sponsors as well as insurance-linked notes from mortgage insurers.

FULL ORIGINAL PUBLICATION HERE 

Cat bond growth propelled by strong investor demand: Moody’s

Moody’s has reported that the catastrophe bond market saw record issuance in 2020 despite a brief pause in Q2 following a particularly tumultuous period for the financial markets.

And looking ahead through 2021, the rating agency expects cat bond issuance to continue to grow with strong investor demand for the asset class, evidenced by a reduction in spreads and upsized deals seen over the last several quarters.

According to Moody’s future growth in the ILS market will likely be driven by pure cat bonds from traditional and non traditional sponsors as well as insurance-linked notes from mortgage insurers.

“The cat bond market has again proven resilient despite some losses and principal payouts, largely from prior period reserve development,” analysts said in a new report.

FULL ORIGINAL PUBLICATION HERE

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.

FULL ORIGINAL PUBLICATION HERE

Peak Re: Bridging the protection gap in emerging markets

Large and getting larger: Emerging Asia’s protection gaps

The prevalence of under-insurance and non-insurance in emerging markets is well-documented.[1] The proverbial protection gap persists across different risks, from property to health and mortality, variously also extending to include longevity and liability. There are many reasons underpinning the large protection gap and low insurance penetration in emerging markets, which can be summarised as the “Triple-A Conundrum” – i.e. lack of Accessibility, Affordability and Awareness.[2] These are considered key impediments to deepen insurance penetration in emerging markets including those in the Asia-Pacific region.

Empirical research on protection gaps has been stymied by a lack of data and standard definitions. In fact, different protection gaps are measured differently. For the property including natural catastrophe (nat cat) protection gap, it is measured in most cases as the difference between economic and insured losses over a period.[3] Mortality protection gap is the short-fall in household financial assets to sustain the living of surviving family members, in case of pre-mature death of the household breadwinner. The more challenging health protection gap is sometimes gauged by out-of-pocket expenses, while some estimates also consider the risk of catastrophic medical bills and non-treatment because of affordability and other reasons.

Notwithstanding the capriciousness of definitions and a dearth of data, empirical research is pointing to large protection gaps in emerging markets.[4] The gaps are of particular concern in emerging Asia, due to the region’s large population and fast economic growth. For instance, it is estimated that emerging Asia accounted for around 40% of the global health and mortality protection gaps, and some 20% of the nat cat protection gap.[5] The gaps are also widening. With property and nat cat protection gap, the rise in asset values particularly in disaster-prone coastal regions has outpaced the growth of insurance cover. This could have aggravated by increasing frequency and severity of calamities. Life-style considerations, rising medical inflation and aging population are some of the factors behind a widening health and mortality protection gap in emerging Asia. While the region has witnessed sustained strong life premium growth over the past decades, much of which is believed to be savings-type insurance policies.

FULL ORIGINAL BLOG POST AVAILABLE 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.

Catastrophe protection gap hit 64% in 2020, $171bn goes uninsured: Aon

FULL ORIGINAL PUBLICATION HERE. AON’S FULL CATASTROPHE REPORT HERE.

The global catastrophe protection gap reached 64% in 2020 as roughly $171 billion of natural catastrophe and severe weather losses were not covered by insurance and reinsurance, one of the largest brokers Aon has said.

Aon’s latest annual catastrophe report highlights climate influences on a significant number of impactful events in 2020 and the brokers’ CEO Greg Case calls for organisations to ensure they are protected against the global risk of concurrent events.

Aon’s report includes 416 natural catastrophe and severe weather events from 2020, which the broker estimates drove economic losses of US $268 billion, some 8% above the average annual losses for this century.

Tre Hapa për të Ndihmuar Shqipërinë për të Përballuar Ndikimet Financiare të Shkaktuara nga Fatkeqësitë dhe Krizat

PUBLIKIMI I PLOT ORIGJINAL KTU

Në vitin 2019, Shqipëria u përball me një seri tërmetesh, ndër të cilët edhe një me magnitudë të lartë; më pas, mes përpjekjeve për rindërtim në vitin 2020, u godit edhe nga pandemia COVID-19. E përballur me nevojat e shumta në rritje, mbështetja e qeverisë shqiptare shkoi për të varfërit dhe personat e prekur nga fatkeqësitë dhe krizat, përfshirë këtu edhe bizneset. Për ta realizuar këtë, ajo shfrytëzoi rezervat fiskale, rishpërndau buxhetet për përparësitë urgjente dhe u mbështet tek ndihma e jashtme. Shumë nga këto masa u ndërmorën në bazë të nevojës.

Në shtator 2020, Banka Botërore së bashku me Ministrinë e Financave dhe Ekonomisë,  kreu vlerësimin diagnostikues në lidhje me financimin e riskut të fatkeqësive në Shqipëri.[1] Kjo përpjekje kishte për qëllim identifikimin e mangësive të financimit të mekanizmave për gatishmërinë financiare të vendit në rast fatkeqësish dhe rekomandimin e mënyrave për përmirësimin e tyre.

Menaxhimi i riskut të fatkeqësive është ndër përparësitë kryesore të politikave në Republikën e Shqipërisë dhe, pak kohë para tërmetit, qeveria shqiptare kreu edhe një seri reformash në këtë drejtim, si për shembull: miratimi i Ligjit të ri për Mbrojtjen Civile, racionalizimi i kornizave institucionale, decentralizimi i funksioneve që aktivizohen pas fatkeqësive dhe vënia në dispozicion e strukturave të nevojshme për fondet e emergjencës në nivel vendor dhe në nivel ministrie të linjës.

Three Steps to Help Albania Withstand the Financial Impacts of Disasters and Crises

FULL ORIGINAL PUBLICATION HERE

In 2019, Albania experienced a series of earthquakes, including a major one; then, amid reconstruction efforts in 2020, it was hit by the COVID-19 pandemic. Confronting multiple increasing needs, the government of Albania supported the poor and those affected by disasters and crises, including businesses. To do so, it tapped into its fiscal reserves, reallocated budgets toward urgent priorities, and relied on external assistance. Many of these measures were ad hoc.

In September 2020, jointly with Albania’s Ministry of Finance and Economy, the World Bank completed a diagnostic of disaster risk finance in Albania[1]. This effort sought to identify financing gaps in—and recommend ways to improve—the country’s financial preparedness for disasters.

Disaster risk management is among Albania’s key policy priorities, and the Albanian government carried out a series of reforms shortly before the earthquake: for instance, it enacted a new Law on Civil Protection, streamlined institutional frameworks, decentralized post-disaster functions, and put in place structures for contingency funds at the local and line ministry level.

Where the new ILS opportunities lie – and how to access them

ORIGINAL PUBLICATION HERE. INTELLIGENT INSURER WEBSITE PUBLICATION HERE.

In a webinar hosted by Intelligent Insurer’s Re/insurance Lounge, AkinovA CEO Henri Winand and Kirill Savrassov of Phoenix CRetro explored the possibilities for ILS to expand into new geographies and lines of business.

A significant motive for bringing insurance-linked securities (ILS) to new geographies is diversification of portfolios, according to Henri Winand, founder and chief executive officer of AkinovA.

Speaking in an Intelligent Insurer Re/insurance Lounge webinar titled “New domiciles, new risks, new structures: another evolution for ILS”, he noted that while an attraction of ILS is that it is seen as uncorrelated from the capital markets, it has a disadvantage in that portfolios are largely concentrated in North America, and to some extent in Asia.