Jamaica still aims for catastrophe bond with World Bank support

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The Government of Jamaica will continue to work alongside the World Bank and other multi-lateral groups to increase its disaster insurance protection this year, even though its priority is a swift economic recovery after the Covid-19 pandemic.

Jamaica had been planning a catastrophe bond issuance for this year, to enhance its disaster insurance arrangements.

The cat bond deal, which has been a work-in-progress for some years now, as we’ve documented regularly, was forcibly delayed by the Covid-19 pandemic, as financial market volatility due to the coronavirus outbreak put the Caribbean island nations’ first cat bond issuance on-hold, the country’s finance minister previously said.

Catastrophe bonds a win-win for governments & investors, says APEC

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The Asia-Pacific Economic Cooperation (APEC) continues to see the development of a regional catastrophe bond market as positive, highlighting at a recent workshop that cat bonds are a win-win relationship for governments and investors.

The workshop last week was convened by The World Bank Treasury alongside the APEC Business Advisory Council (ABAC) and Asia-Pacific Financial Forum, to educate on the use of catastrophe bonds as disaster risk transfer instruments for the APEC Regional Disaster Risk Financing and Insurance Solutions Working Group.

The goal is to expand the understanding of the role catastrophe bonds can play, as well as the important role insurance and reinsurance risk transfer products play in protecting the fiscal budgets of countries against impactful natural disasters.

Asian ILS market to benefit regional re/insurers: Fitch

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The development and growth of an insurance-linked securities (ILS) market in Asia can only be a benefit to local insurance and reinsurance carriers, as well as those operating regionally, as the capital markets capacity can help them expand their ability to underwrite and diversify capacity sources, rating agency Fitch explained recently.

Fitch noted in a recent report that Asian insurers and reinsurers are taking up catastrophe reinsurance and retrocession cover in excess of the minimum regulatory requirements to improve their risk mitigation capabilities.

In the future insurance-linked securities (ILS), such as catastrophe bonds and other securitised reinsurance or retro arrangements backed by capital market investors, are likely to assist in this regard.

More than $1 billion pledged for post-earthquake recovery in Albania

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The international community has pledged $1.25 billion to help Albania recover from a devastating earthquake during a European Union-led donors’ conference in Brussels. 

“UN agencies have joined forces in developing and implementing the recovery measures based on the sectoral needs as identified by the Government,” said Mirjana Spoljaric Egger, Director of the UN Development Programme (UNDP) Regional Bureau for Europe and the CIS.

The pledges are expected to cover the country’s reconstruction needs following the November 2019 earthquake, which was the strongest to hit Albania in more than 30 years and killed 51 people.

The aftermath of the earthquake also increased the poverty rate by 2.3 per cent and hit more than one per cent of gross domestic product (GDP), with 220,000 people or 10 percent of the country’s population being affected.

A post-disaster needs assessment undertaken by the European Union, the United Nations, the World Bank and Albania appealed for € 1.08 billion from international donors to rebuild vital infrastructure such as houses, schools, and businesses.

That amount will also fund an upgrade in the country’s disaster preparedness.

Ms. Spoljaric called for transparency in the recovery effort and urged the Albanian Government to streamline its disaster preparedness, as the country being the most vulnerable to disasters in Europe.

She further added that a strong recovery programme would provide sound foundations for the achievement of the Sustainable Development Goals (SDGs) in Albania.

Jamaica readies for first cat bond, already budgeting for its renewal

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Despite the fact a catastrophe bond for Jamaica has not yet come to market, after receiving support to pay premiums for the in-development first issuance the Caribbean island nation is already preparing to budget for its future renewal.

Jamaica’s government has been working towards sponsoring its first catastrophe bond for at least two years, with assistance from the World Bank.

Our latest two updates on Jamaica’s progress towards becoming a cat bond sponsor discussed the support provided by the World Bank in risk modelling for the perils to be covered, and funding the country has received to help in paying cat bond premiums to investors.

Mexico returns for $425m+ quake & hurricane World Bank cat bond

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The government of Mexico has returned to the catastrophe bond market with the help of the World Bank and its International Bank for Reconstruction and Development (IBRD), seeking a $425 million or larger slice of parametric earthquake and hurricane disaster insurance from the capital markets through an issue we’ve named IBRD / FONDEN 2020 that is the first to incorporate sustainable development bond features.

The new transaction, which has just come to market according to sources, will be the sixth catastrophe bond that the government of Mexico’s natural disaster fund, FONDEN will be the ultimate beneficiary of.

Details on the others, the soon to mature 2018 issuance IBRD CAR 118-119, the 2017 issuance that was triggered by the Chiapas earthquake IBRD / FONDEN 2017, the 2012 cat bond that paid out after hurricane Patricia MultiCat Mexico Ltd. (Series 2012-1), the 2009 issued MultiCat Mexico 2009 Ltd., and the 2006 issuance CAT-Mex Ltd., can all be found in our extensive catastrophe bond Deal Directory.

World Bank helps Vanuatu & Grenada to catastrophe contingent financing

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The World Bank has helped two more countries join those benefiting from a source of catastrophe contingent disaster risk financing, as both Vanuatu and Grenada become the latest to receive a Catastrophe Deferred Drawdown Option (Cat DDO) arrangement.

The World Bank continues to deliver these catastrophe contingent risk financing solutions to countries exposed to peak perils as a way to introduce them to contingent disaster risk finance and insurance or reinsurance related arrangements.

The Catastrophe Deferred Drawdown Option (Cat DDO) is now one of the staple sources of capacity for countries interested in disaster risk financing, thanks to the help of the World Bank.

BiH: introducing a form of compulsory insurance for residential buildings is under consideration

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Establishing a national disaster insurance scheme is one of the main features of the UNDP’s NAP for Bosnia & Herzegovina. Improving BiH’s preparedness for dealing with Nat Cat events is instrumental considering the expected increase in flood losses and the very low current insurance coverage.

Over the past eighteen years the country has had 7 years of drought and 5 years of flooding, specifically in 2014 when major flooding caused damages equivalent to 15% of the country’s GDP for that year, an article prepared by the UNDP reads. Moreover, according to the European Environment Agency, annual flood losses in BiH are expected to increase five-fold by 2050 and up to 17-fold by 2080.

ESG qualities of ILS driving greater investor interest: Wojciechowski, BSX

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As institutional investors look to asset classes that promote sustainable and responsible investing, increasingly, they are drawn to the environmental, social and governance (ESG) qualities of insurance-linked securities (ILS), according to Greg Wojciechowski, President and Chief Executive Officer (CEO) of the Bermuda Stock Exchange (BSX).

Speaking during a panel discussion held in Bermuda last year and hosted by Kroll Bond Rating Agency (KBRA), Wojciechowski, alongside PwC’s Arthur Wightman, Ariane West of Nephila Climate and moderator Brad Adderley of Appleby, discussed the connection between ILS and ESG considerations.

ILS and catastrophe bonds have been identified as sustainable development investments. Specifically, it’s been identified by some experienced ILS investors that the asset class meets the United Nation’s Sustainable Development Goal #13, which relates to taking action on climate change.

Parametric risk transfer critical to address climate change: WTW’s Hess at Davos

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To reach the required levels of adaptation and increase the world’s resilience to climate change, parametric insurance is critical in order to manage the long-term impacts and the transition, according to Carl Hess, Head of Investment, Risk and Reinsurance at broker Willis Towers Watson (WTW).

Hess was speaking as part of a panel session at the 2020 edition of the annual World Economic Forum (WEF) meetings in Davos, Switzerland.

He explored what needs to happen in order to get people to invest more in the preparation that is required to reach the adaptation needed, and ultimately increase the resilience of the world to the impacts of climate change.