Allocations to alternative investments to increase, ESG a factor: Eaton Partners

A survey of institutional investors by Eaton Partners found that almost two-thirds intend to increase their allocations to alternative asset classes and private capital markets, with 9% of respondents targeting non-correlated assets specifically, while ESG is also seen as an important factor for future investment flows.

“As the world navigates new challenges related to the ongoing pandemic, inflationary pressures, supply chain disruption, and market volatility, LPs remain confident in the ability of private capital markets to weather these storms,” explained Jeff Eaton, Global Co-Head and Managing Director at Eaton Partners.

The survey found that institutional investors continue to have a constructive outlook on private capital markets and alternative investments, set against a backdrop of rising inflation, potentially higher interest rates, and with increased scrutiny on environmental, social, and governance (ESG) issues also a factor.

FULL ORIGINAL PUBLICATION HERE

BlackRock aims to raise $2.3bn+ for ESG fund that targets cat bonds

Giant asset manager BlackRock is aiming to raise more than $2.3 billion for its new environmental, social and governance (ESG) investment fund strategy that includes catastrophe bonds as one of its target asset types.

As we were the first to cover back in August, the investment manager is marketing the soon to launch BlackRock ESG Capital Allocation Trust, a closed-end fund strategy focused on equity and debt securities, at least 80% of which will be expected to meet specified environmental, social and governance (ESG) criteria.

The strategy will see BlackRock’s portfolio managers for the ESG fund screen out certain issuers and focus on bonds that are demonstrably ESG appropriate.

FULL ORIGINAL PUBLICATION HERE

Red Cross volcano cat bond issuance recognised for ESG credentials

The first parametric catastrophe bond covering pure volcanic eruption risk, which was brought to market by Replexus and Howden Capital Markets and for the Danish Red Cross has been recognised for its environmental, social and governance (ESG) credentials.

The Guernsey International Insurance Association (GIIA) has awarded its first environmental, social and governance (ESG) accreditation to an insurance entity and that entity is the Dunant Re IC Limited incorporated cell of Replexus ICC (Guernsey) Limited, the issuer of the volcano catastrophe bond earlier this year.

Operated and arranged by Cedric Edmonds, Founder and Director at Replexus ICC, while managed by Aon Insurance Managers (Guernsey), the vehicle has been recognised thanks to being the home to the first humanitarian catastrophe bond issuance.

FULL ORIGINAL PUBLICATION HERE

ILS capital returns to previous record level of $97bn: Aon

Helped by a record period of catastrophe bond issuance in the first-half of 2021, alternative capital levels in reinsurance, largely in insurance-linked securities (ILS) formats, have now returned to their previous record year-end level of $97 billion, according to Aon.

As of the half-way point of 2021, Aon’s Reinsurance Solutions counts total global reinsurance capital as having reached a new high of $660 billion.

That’s increased by just over 1.5% since the end of 2020, as additional capital raises, positive performance and retained earnings, as well as ILS market expansion, drove the global reinsurance capital base higher again.

FULL ORIGINAL PUBLICATION HERE

Weather disasters drive US $ 3.64 trillion in losses in 50 years: WMO data

The high costs of weather disasters around the globe is truly laid bare by the latest data from the World Meteorological Organization (WMO), which estimates that weather, climate and water related disasters drove some US$ 3.64 trillion in losses over the last 50 years.

The WMO’s latest Atlas of Mortality and Economic Losses from Weather, Climate and Water Extremes covers the period from 1970 to 2019, during which over 2 million lives were lost to these disasters.

That is from more than 11,000 reported disasters recorded, and during the period the research found that weather, climate and water hazards accounted for 50% of all disasters, 45% of all reported deaths and 74% of all reported economic losses, while more than 91% of these deaths occurred in developing countries.

FULL ORIGINAL PUBLICATION HERE

As ESG transparency factors into renewals, what does that mean for ILS?

Broking powerhouse Aon has highlighted that environmental, social and governance (ESG) transparency is increasingly a factor in commercial and business insurance renewals, which suggests this will eventually cascade to reinsurance and retrocession renewals as well.

Commenting specifically on insurance renewals, Aon explains that ESG transparency is increasingly demanded of protection buyers, as major insurers become more focused on paring down their exposure to industries and businesses deemed not to meet ESG standards.

Environmental, social and governance (ESG) discussion is often focused on the investment side of the insurance and reinsurance industry, also in insurance-linked securities (ILS).

FULL ORIGINAL PUBLICATION HERE

ESG credentials of ILS attracting new investors & issuers: John Seo, Fermat

The environmental, social and governance (ESG) credentials of the insurance-linked securities (ILS) market have become a key driver for issuance activity, according to John Seo of Fermat Capital Management, LLC.

The insurance-linked securities (ILS) asset class has experienced positive momentum and growth over the last year, with catastrophe bonds one area that has experienced particularly positive inflows from investors.

While this can be attributed in part to the reinsurance needs of ceding companies, alongside continued strong appetite for non-correlating investments among capital market investors, John Seo, Co-Founder and Managing Director of ILS and catastrophe bond focused investment manager, Fermat Capital, believes that increasingly, ESG is playing a role in market activity.

FULL ORIGINAL PUBLICATION HERE

UZBEKISTAN: UNDP helps develop the insurance sector in Uzbekistan

UNDP, together with the Agency for the Insurance Market Development at the Uzbek Ministry of Finance, organized a seminar on June 24, 2021, during which the results of the diagnostics of the development of inclusive insurance and risk financing in Uzbekistan were presented, UzDaily.uz reports.

It was noted that due to the vulnerability of Uzbekistan to natural disasters, which can bring devastating consequences for the economy and the population, as well as the insufficient development of the insurance market and the lack of tools for inclusive insurance and risk financing, the government, enterprises, and households of the country suffer financial losses amounting to millions of USD.

UNDP established a special Risk Insurance and Financing Fund (Mechanism) to provide technical assistance to countries participating in the climate risk insurance program, including Uzbekistan, to develop inclusive insurance, financing sovereign risks, and integrate insurance into development planning and financing processes. At the first stage, the task was set to diagnose the insurance industry in the country, and the results of this study, as well as the recommendations of experts on the development of this sector, were discussed during the seminar.

FULL PUBLICATION HERE

Today’s ILS Investor: A Catalyst for Change

The $90 billion insurance-linked securities (ILS) sector is undergoing a sea change, led by investors with significant experience in the industry and a heightened awareness of the need to marry their desire for non-correlated risk and attractive returns with the growing demand for responsible investment.

For most of the last 20 years, traditional ILS investors have been hedge funds, pension funds and other institutional investors. They look to the insurance and reinsurance sector for portfolio diversification as an alternative, non-correlating asset class that produces historically strong returns.

The more traditional appetite for ILS had been high-severity, low-frequency events with a short duration. Natural catastrophe perils, which until 2017 made consistently positive returns (for the most part), were a compelling investment target.

FULL ORIGINAL PUBLICATION HERE

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.

FULL ORIGINAL PUBLICATION HERE