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.

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

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

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

The only asset class that helps people rebuild after natural disasters

A core reason that insurance-linked securities (ILS), such as catastrophe bonds and other reinsurance linked investments, are considered as socially responsible investments by many allocators is the fact they deploy their capital into natural disaster recovery and rebuilding.

While ESG, environment, social and governance factors, are now seen as becoming critical for insurance-linked securities (ILS) strategies future popularity, the truth is that at least the S (social) aspect of ESG has been firmly embedded in the majority of ILS right from the start.

We first wrote about the importance of ESG for the catastrophe bond and broader ILS market back in 2009, when for the first time we learned of a pension fund citing ESG as an important criteria for its consideration of investing in a cat bond fund.

FULL ORIGINAL PUBLICATION HERE

More & better “catastrophe-triggered” instruments needed: UN Sec-Gen Guterres

United Nations (UN) Secretary General António Guterres has again said that the world needs more catastrophe-triggered financing and better instruments to support the delivery of climate financing, to enhance disaster resilience, fund adaptation measures and finance climate risk.

Speaking today at the Insurance Development Forum’s (IDF) Summit 2021, UN Secretary General Guterres explained the important roles of the insurance sector (within which we’d include reinsurance and insurance-linked securities (ILS) of course) in adapting to a rapidly changing climate and the race to transition to net zero emissions by 2050.

With more than $35 trillion dollars of assets under management in the global insurance and reinsurance industry, Guterres said, “I encourage the insurance industry to align its portfolios and investments with net zero by 2050.

FULL ORIGINAL PUBLICATION HERE

Generali targets EUR200m Lion III Re “green cat bond”

Italian and global insurance giant Assicurazioni Generali S.p.A. is back in the catastrophe bond market with its fourth issuance, a EUR 200 million Lion III Re DAC cat bond through which it is seeking collateralized catastrophe reinsurance while adding “green” features to a cat bond issue.

It’s Assicurazioni Generali’s first cat bond issuance since 2017, it’s fourth in total, and marks a renewal of that also EUR 200 million Lion II Re DAC deal, although covering fewer perils as European flood coverage has been dropped for this new iteration of the Lion catastrophe bond.

It’s also the first cat bond from the insurer, in fact the first cat bond we’ve listed, to have a number of specific green credentials, as Generali looks to bring greater sustainability to cat bond issues, to make the resulting investment more ESG appropriate for investors.

FULL ORIGINAL PUBLICATION HERE

Secondary cat bond trading rises as $3.3bn May issuance drives portfolio changes

The volume of catastrophe bond notes traded on the secondary market rose again in May 2021, as insurance-linked securities (ILS) fund managers and cat bond investors adjusted their portfolios to accept the strong almost $3.3 billion of primary issuance seen during the month.

May 2021 saw the highest level of primary issuance of catastrophe bonds so far in 2021,.

The close to $3.3 billion of new cat bonds issued came from 9 144A cat bonds with a US peril focus as you’d expect at this time of year, as well as 1 private cat bond deal, according to the Artemis Deal Directory.

That eclipsed April’s almost $2.5 billion of issuance and March’s $2.9 billion of issuance (both including some mortgage ILS issuance) and this run of strong issuance months has made for steadily rising secondary cat bond trading as well.

FULL ORIGINAL PUBLICATION HERE