World Economic Forum eyes risk sharing with catastrophe bonds: Davos 2020

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A World Economic Forum (WEF) initiative focused on responses to humanitarian risk is investigating areas where catastrophe bonds may prove valuable tools for risk sharing with private markets and investors, according to a United Nations representative.

The World Economic Forum (WEF) is an international organisation focused on public-private cooperation. Its annual meeting is approaching fast, held in Davos, Switzerland next week and as a result discussion of risk related issues, from disasters to humanitarian catastrophes, are front and centre once again.

In advance of the WEF’s Davos 2020 meeting, United Nations representative Mark Lowcock, the Undersecretary-General for Humanitarian Affairs and Emergency Relief Coordinator, at the UN Office for the Coordination of Humanitarian Affairs (UN OCHA), raised catastrophe bonds and risk transfer to private or capital market investors as a key route towards sharing (transferring) risks.

Страховые Ценные Бумаги и транзитные страны инициативы “Один пояс, один путь”

Перевод оригинальной статьи (in English) для 16-го конгресса SIRC. PDF версия здесь. 中文

По словам руководителя компании Phoenix CRetro Кирилла Саврасова, внедрение катастрофических облигаций на фоне инвестиций в проекты инициативы «Один пояс, Один путь» сможет нивелировать риск крупных бюджетных потерь и укрепить макроэкономическую стабильность региона стран бывшего СССР и западных Балкан путем организации инструментов быстрого доступа к финансовым ресурсам, необходимым для восстановления экономики пострадавших стран при наступлении значительных природных катастроф. 

Так совпало, что в день написания этой статьи, в Стамбуле произошло землетрясение магнитудой в 5.8 баллов, которое вызвало панику среди населения и повлекло за собой эвакуацию школ и государственных учреждений. Также в этом густонаселенном городе с количеством жителей более 15 млн. в одной из мечетей обрушился минарет.

На той же неделе, похожее событие в северо-восточном Пакистане стало причиной гибели 38 и ранения более чем 700 человек и серьезного ущерба критической инфраструктуре – дорогам и мостам.

Climate change adaptation financing can benefit from partnership with ILS

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Climate change adaptation projects and the need for them are rising up the agenda, as a recent surge in damages from severe weather and climate related catastrophe events concentrates the mind on the importance of investing in this area.

Public authorities are showing renewed and increasing interest in climate adaptation, while they are also more aware than ever of the need for investment to support the ultimate goal of a more resilient society.

However, while investments into climate change adaptation projects are flowing, they aren’t anywhere near sufficient to deliver the significant progress required to actually increase the resilience of the regions of the world facing the highest climate related risks.

Philippines cat bond illustrates Singapore – World Bank alignment on ILS

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Singapore and the World Bank aligned their missions to collaborate on the recent landmark first catastrophe bond issuance for the Philippines, as the pair look to stimulate insurance-linked securities (ILS) issuance in Asia as a financial solution for climate resilience.

The Philippines catastrophe bond, IBRD CAR 123-124 which completed last week to provide the country $225 million of disaster insurance capacity covering certain earthquake and cyclone losses, is the first from an Asian sovereign sponsor, the first to be listed in Asia and the first cat bond notes listed on the Singapore Exchange (SGX).

Asia and its people suffer around one-third of the world’s natural catastrophes each year, with significant impacts to the economy, as well as lives and livelihoods.

Philippines cat bond will be first to list on Singapore Stock Exchange

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The inaugural catastrophe bond to benefit the Philippines will also set another ILS market first, as the $225 million of notes issued through the World Bank’s IBRD CAR 123-124 cat bond transaction will be listed on the Singapore Stock Exchange (SGX).

We understand that this will be the first listing of catastrophe bond or insurance-linked securities (ILS) notes on the Singapore Stock Exchange (SGX), since it began offering listing services alongside the Singapore ILS grant program.

It’s even more noteworthy given that the first ILS listing on the SGX is a cat bond transaction from an international issuer, rather than one issued using a Singapore domiciled ILS structure.

一带一路国家与保险连接证券

阅读英文原件。 PDF版本在这里

Phoenix CRetro保险证券公司总裁吉里尔·萨符拉索夫Kirill Savrassov)指出,由于巨大的投资在整个欧亚区域注入一带一路倡议,引入巨灾债券可以帮助政府负债表免除风险,并加强宏观经济稳定性,同时也提供迅速的资金恢复途径。

我在写这篇文章的那一天,5.8级地震震动了伊斯坦布尔,造成了居民恐慌,学校和公务单位的撤离。其也在土耳其人口最大的城市里导致了清真寺的尖塔倒塌。

土耳其地震同一周之内,在东北巴基斯坦也发生了5.8级地震现象,造成38人死亡及700多人受伤。其也对这个巴基斯坦区域内的基础设施和路途造成了广泛的损害。

1999年,在土耳其西部发生的7.4级地震造成了17,000多人死亡。除了威胁伊斯坦布尔这个城市,最新的颤动强烈提醒我们,土耳其作为欧亚大陆的一部分一直面临着各种自然灾害和地震的威胁。

Belt and Road’s opportunities

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As investments into China’s Belt and Road Initiative (BRI) increase, Kirill Savrassov, CEO of Phoenix CRetro Reinsurance Company, told Baden-Baden Today that it represents big opportunities and challenges for the reinsurance industry, especially from a cat perspective.

He said the project, led by China and sometimes described as a multibillion dollar rebirth of the Silk Road, offers a key opportunity in exponential demand in additional cat capacity from local BRI transit markets.

However, he flagged potential challenges, saying: “I would note state ownership of critical infrastructure, low insurance penetration—below 2 or even 1.5 percent— with general underdevelopment of local markets in BRI transit countries, and existing and potential protectionism in re/insurance.”

Protecting the Belt & Road

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China’s Belt and Road Initiative, the economic project which aims to recreate the ancient Silk Road that linked Europe to Asia, needs protecting. ILS could provide the perfect solution, as Kirill K. Savrassov, chief executive of Phoenix CRetro Reinsurance Company, tells Bermuda:Re+ILS.

In September a 5.8 magnitude earthquake shook Istanbul, triggering the evacuation of schools and public buildings and damaging buildings. The same week, a 5.8 magnitude event killed 38 people and caused massive damage to infrastructure and roads in north-eastern Pakistan.

For Turkey it represented a stark reminder of how bad these events can be. In 1999, a 7.4 magnitude earthquake in the western part of the country killed more than 17,000 people.

Parametric ILS “vital” to reduce protection gaps, increase resilience: Mark Carney, Bank of England

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Mark Carney, the Governor of the Bank of England, discussed the role of insurance and reinsurance technology as an essential financial took to smooth the world’s transition to a 1.5 degree world and highlighted the role of insurance-linked securities (ILS) within that.

Speaking on Sunday in New York, on the sidelines of the Climate Action Summit held at the United Nations, Carney said that the insurance and reinsurance sectors role in responding to climate change is “crucial” and can be “decisive.”

The Governor of the Bank of England explained that the re/insurance market brings three valuable traits with it, expertise, money and a perspective on climate related risks, which are all “crucial in helping society adjust to the reality of that transition.”