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

by with No Comment ABILSColleagues & NewcomersCRetroDRR Istanbul colleagues

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.

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Hamilton looks to Singapore for first full cat bond with Easton Re Pte. Ltd.

by with No Comment ArtemisBelt & RoadBermudaCAT BondsChinaColleagues & NewcomersCRetroILSILS Funds/strategies launchParametricPension & Hedge FundsSingapore

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Hamilton, the Bermuda based insurance and reinsurance holding company, is entering the catastrophe bond market for its first full, syndicated Rule 144a transaction and Singapore is to be the domicile of choice, after the company registered Easton Re Pte. Ltd.  as an issuer.

Our sources told us that Hamilton would likely return to the catastrophe bond market towards the end of this year, as it seeks out third-party capitalised retrocessional reinsurance protection for the book underwritten by its reinsurer Hamilton Re.

Hamilton Re has sponsored a private catastrophe bond issuance before, using reinsurance broker Guy Carpenter’s cat bond issuance vehicle Cerulean Re SAC Ltd.

Collateralized reinsurance to contract further, liquid ILS strategies to prosper: Aon

by with No Comment ArtemisCRetroILSPension & Hedge Funds

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The collateralized reinsurance market segment of insurance-linked securities (ILS) is expected to contract further, according to broker Aon, although it will likely remain the largest segment of ILS for the foreseeable future it seems.

In Aon Securities’ latest annual ILS market report, the capital markets unit of the global insurance and reinsurance broker explains that the collateralized reinsurance segment shrank by 6.5% in the first-half of 2020.

At the end of 2019 the collateralized reinsurance segment totalled $52.7 billion of the ILS market’s limit.

Rated paper & ILS may be favoured over collateralized UNL retro at renewals: Aon

by with No Comment ArtemisColleagues & NewcomersCRetro

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Retrocessional reinsurance coverage written by rated carriers, as well as other insurance-linked securities (ILS) products such as industry-loss based instruments, may find themselves in favour over collateralized ultimate net loss retro at the upcoming renewals, Aon executives said recently.

Speaking during a media briefing held in place of the Monte Carlo Rendez-vous by the brokers Reinsurance Solutions unit, CEO Andy Marcell and CEO of Aon Securities Paul Schultz implied that there could be a shift in buying behaviour, partly driven by challenges over trapped collateral.

The expectation is that more collateralized retro reinsurance capacity gets trapped at the end of this year, as retro buyers seek to protect themselves against the uncertain levels of pandemic related losses they may face.

ILW demand rising, prices could soar for Japanese wind triggers

by with No Comment ArtemisColleagues & NewcomersCRetroILSILWModdelingParametricPension & Hedge Funds

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Indicative pricing for Japanese wind exposed industry-loss warranty (ILW) backed retrocessional reinsurance protection have risen significantly in response to the now consecutive years of heavy Japan typhoon losses, as well as nervousness over where current loss estimates will be finalised.

At the same time, we’re told demand for ILW capacity covering U.S. perils is up significantly in advance of the January reinsurance renewals, as a number of major players look to all natural peril coverage in index trigger form as a way to augment their retrocession programs.

With the retro market again impacted by losses and trapped collateral in 2019, resulting in a capacity crunch, we understand that there is significant demand building for retro aggregate products that may not be satisfied at 1/1, given the expectation retro capacity could be limited.

Oxbridge Re’s sidecar avoids impact from 2019 catastrophes so far

by with No Comment Colleagues & NewcomersCRetroILSILS Funds/strategies launchIPOs

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The Oxbridge Re NS Ltd. fully collateralized reinsurance sidecar vehicle sponsored by Cayman Islands based reinsurance firm Oxbridge Re Ltd. has avoided losses from all of the recent global catastrophe loss events.

The Oxbridge Re NS quota share reinsurance sidecar has managed to avoid any impact from events including the Japanese typhoons right up to the most recent Hagibis, while also avoiding any losses from hurricane Dorian during Q3 as well.

Oxbridge Re reported its third-quarter results yesterday and revealed that the company got through the period with a loss ratio of zero, as none of the catastrophe events occurring in the period affected its underwriting portfolio.

First PCS triggered Japan ILW brokered by Willis Re

by with No Comment ArtemisCRetroILSILWModdelingPension & Hedge Funds

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Property Claim Services (PCS) industry loss data aggregation and index reporting services for non-marine catastrophe losses in Japan has already been used for an industry loss warranty (ILW).

We’ve learned that reinsurance broker Willis Re has become the first to structure and trade an industry loss triggered retrocessional risk transfer instrument using the still relatively new PCS Japan index as a trigger.

PCS launched its Japan focused industry loss data and index service in January of this year, as it responded to demand from its client base following the impacts of major catastrophe losses in 2018.

Capital market cessions rise among leading reinsurers tracked by Aon

by with No Comment ArtemisAsset Class / BrochureCRetroDRR Istanbul colleaguesILSPension & Hedge Funds

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Cessions of premiums to capital markets investors and specialist insurance-linked securities (ILS) funds rose among the Aon Reinsurance Aggregate group of companies tracked by the broker.

Greater use of capital markets backed collateralised reinsurance has helped the 23 major reinsurers tracked by Aon to offset the impact of the record level of catastrophe losses experienced in 2017 and 2018.

In fact, insurance and reinsurance broker Aon notes that the reinsurers it tracks absorbed around $32 billion of the roughly $220 billion of private market catastrophe losses experienced in 2017 and 2018, which is a relatively small proportion given the scale of these companies and reflects higher cessions and the rising role of alternative capital in absorbing losses from major global catastrophe events.

Alternative capital up, traditional down, as reinsurer profits shrink again

by with No Comment ArtemisAsset Class / BrochureColleagues & NewcomersCRetroILS

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Alternative reinsurance capital’s continued growth through 2018, as well as the slight shrinking of traditional reinsurer capital have been confirmed in a report out today, while at the same time profits at reinsurers are seen to have shrunk again, based on underlying returns on equity (ROE’s).

Total dedicated global reinsurance sector capital was measured at $462 billion at the end of 2018, according to Willis Re’s latest report.

Shareholder equity of the 32 reinsurance companies tracked in the firms Willis Reinsurance Index fell by 10% to $335.7 billion, a reversal from the growth of 8% seen in 2017.

But alternative reinsurance capital, so that employed by insurance-linked securities (ILS) funds, collateralized reinsurers and other capital markets backed structures, expanded by 6% to reach $93 billion at the end of 2018.

Collateralized reinsurance worked as designed & advertised: John Forney, CEO UPC

by with No Comment ArtemisAsset Class / BrochureClientsCRetroILS

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Collateralized reinsurance structures and markets worked exactly as designed and advertised, which gives United Insurance Holdings (UPC Insurance) the confidence to execute on its strategy, according to CEO John Forney.

United (UPC) is a major user of collateralized reinsurance capacity, from insurance-linked securities (ILS) funds as well as from catastrophe bond investors.

The expansive insurer, which began as a Florida property only specialist but has been expanding more broadly nationwide in the United States, has grown its use of alternative capital along with its expansion and as a result the ILS market is a key partner for the company now.