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.

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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.

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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.

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Weather disasters displace more people than any other factor globally in 2020

A new report shows that weather related disasters were the primary driver of displaced people in 2020, with almost three-quarters of people internally displaced affected by weather, with storms and flooding the primary peril drivers of this.

In 2020 alone, some 40.5 million people were internally displaced within their own countries, with conflict and violence the cause of just over one-quarter and weather the rest.

Geophysical natural disasters were also a cause of displacement, with 655,000 people internally displaced by earthquakes and volcanic eruptions during the year.

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Generali hails completion of the first green catastrophe bond

Italian and global insurance giant Assicurazioni Generali S.p.A. has hailed the successful completion of its first green catastrophe bond issuance, the EUR 200 million Lion III Re DAC transaction.

The deal was launched to the cat bond investor community earlier this month, and benefiting from strong investor demand Generali secured it at attractive pricing, as we’d previously explained.

The company said today that the EUR 200 million cat bond, which is exposed to windstorms in Europe and earthquakes in Italy, is “the first ever ILS issuance that embeds innovative green features in compliance with the Generali Green ILS Framework.”

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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.

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Global insurance protection gap hit $1.4 trillion high in 2020: Swiss Re

The global insurance protection gap, or the gap between economic losses and those that are insured, widened in 2020 as pandemic related effects drove global macroeconomic resilience to decline by 18%, according to a measure by reinsurance firm Swiss Re.

Swiss Re Institute has published its Resilience Index, which shows that the COVID-19 pandemic reduced global macroeconomic resilience by close to a fifth in 2020.

Global economic growth is expected to recover strongly in 2021, after the pandemic-induced recession in 2020, thee reinsurance firm said, which it expects will help to build macroeconomic resilience again.

However, Swiss Re warns that “there will not be a return to pre-COVID-19 levels of resilience in 2021.”

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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.

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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.

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ILS is a growing part of the ESG mosaic, say industry experts

As responsible and sustainable investing continues to gain traction, the insurance-linked securities (ILS) asset class is expected to play an increasing role, but it’s important that the sector tells its own environmental, social and governance (ESG) story.

This is according to ILS and reinsurance industry experts speaking recently at the virtually held SIFMA Insurance and Risk Linked Securities conference.

The opening day of the event ended with a panel discussion on the future of ESG in the ILS market, moderated by Andy Palmer, Director, Deputy Head of ILS structuring, Swiss Re Capital Markets Limited.

Early in the discussion, panellist François Divet, Head of Insurance Linked Securities, Structured Finance, AXA Investment Managers, explained that at both AXA IM and the wider AXA Group, ESG subjects are viewed as extremely important for the reinsurance industry as a whole.

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