More ILW’s to pay out on latest hurricane Irma industry loss increase


A number of industry-loss warranty (ILW) contracts providing retrocessional reinsurance are set to pay out after the latest updates to third-party data providers estimates of insurance industry losses caused by last year’s hurricane Irma.

At the beginning of July the industry loss estimate for hurricane Irma passed another key ILW trigger point we understand, resulting in a further hit to traditional and alternative or ILS fund capacity providers to some affected transactions.

We’re told that two triggers have actually been breached, a new high for hurricane Irma losses in Florida alone, as well as a new total across the U.S. and Caribbean, both of which could affect certain industry loss trigger reinsurance and retro contracts, including ILW’s.

Hurricane Irma claims pass $10.2bn in Florida & Caribbean


Insurance claims due to the impact of hurricane Irma are rising above $10.2 billion, with the total reported by the regulator in Florida having now neared $8 billion, while a French insurance association reports claims in the Caribbean are now expected to reach $2.26 billion.

Other industry estimates of insurance and reinsurance losses due to hurricane Irma in the United States largely range from $15 billion and upwards to $17.5 billion, but the figure of almost $8 billion from the Florida Office of Insurance Regulation is based on claim amounts agreed upon and with 14% of claims currently filed still, open the total is destined to rise further.

Hurricane-hit catastrophe bond managers plan new funds


(Reuters) — Hedge funds and other managers of catastrophe bond funds racked up some of the worst losses in more than a decade from this year’s hurricanes and wildfires.

But a year that is shaping up to be the costliest on record for insurance losses from natural disasters is nonetheless clearing a path for new fund launches.

Credit Suisse Asset Management, Securis Investment Partners and Stone Ridge Asset Management are all launching new funds in insurance-linked securities such as catastrophe bonds, sources say.

Alternative capital moves from reinsurance competitor to partner


The impact on global reinsurance pricing that alternative, or third-party capital has had during its recent and impressive growth could be declining, as traditional market players have become more comfortable with the influential segment of the risk transfer space, according to industry experts.

For traditional reinsurance companies, conversations surrounding the influx of efficient alternative capital has increasingly moved away from competition to collaboration, with more and more market participants now eager to work with alternative capital in some form.

2017 is different for aggregate cat bonds, wildfires a threat: Twelve Capital


Insurance and reinsurance linked investment fund manager Twelve Capital highlights that 2017 is a very different year for aggregate catastrophe bonds, as wildfire risks which typically only contribute a small amount of any cat bonds expected loss could be the peril that tips a number of transaction into paying out.

ILS manager Twelve Capital said that California wildfire damages are, in a typical year, not expected to result in cat bond losses, but 2017 has proven to be different, placing a number of bonds at particular risk.

Hurricanes could signal beginning of a new chapter for ILS: Milliman


In the future, the industry might well look back at hurricanes Harvey, Irma, and Maria as the start of a new chapter for the alternative capital, or insurance-linked securities (ILS) market, according to Aaron Koch, Director, Insurance-Linked Securities Group, P&C Division, Consulting Actuary, Milliman.

The high level of catastrophe losses experienced in the third-quarter of 2017 is expected to result in insurance and reinsurance industry losses of around $100 billion.

ILS market roars to new heights


The ILS market had one of its most successful ever years in 2017 and is well placed at it enters 2018, according to Paul Schultz, CEO of Aon Securities.

“It’s been quite a year,” says Paul Schultz, CEO of Aon Securities. “The first half of the year was historic and there were record levels of issuance, due to the culmination of a lot of elements that all went in the right direction for the insurance-linked securities (ILS) market.

“There was a good supply of capital from investors to be deployed into the market, and the pricing from a cedant’s perspective was attractive, so we saw a good number of clients take advantage of that pricing.”

Schultz adds that during the year there were some very large deals in the market, and that three of the five largest ever deals in the cat bond market were completed during the 12 months to December 2017. As a result, a combination of live issuance and larger deals than have been typical of the ILS market, all in the first half of 2017, led to new records from an issuance perspective.

According to Schultz, the natural catastrophe events of the summer, including the multiple hurricanes, the Mexican earthquake and the wildfires in California, caused a pause in issuance, as cedants reviewed their programmes and loss development and investors digested the magnitude of the losses and took stock of their positions and strategies going forward.

However, Schultz is positive. “I would say that the market behaved in a very orderly fashion. The ILS market was tested in a meaningful way this year with records level of capital deployed and it showed that it had the ability to absorb losses and then trade forward,” he says.

“This autumn we’ve seen a number of new deals come to market, following on from these events, so we’re back on track heading for more stability and certainty. We’re still trying to navigate where the market is going to price in the near term, and where the capacity is going to be in the near term, but the steps that have been made so far in the wake of the catastrophes in 2017 have been constructive and are heading towards greater stability.

“In fact, I believe the market is actually poised to go to the next level. Some of the activity that we’ve seen this year is going to drive greater growth opportunities and greater issuance into the market, starting with 2018 and going forward from there.

“The ability to deploy capital and the rate opportunities that are now available are even more competitive on a relative basis compared to other asset strategies.

“Before the hurricane season and the other cat events we were still coming in line with other asset strategies, but post-event, given what will happen to pricing in the near term, it will be quite favourable for the capital providers and the end investors who are deploying capital into this sector,” Schultz concludes.

Leadenhall grows ILS assets 29% to $4.5 billion


Leadenhall Capital Partners, the London headquartered insurance and reinsurance linked securities fund manager, has grown its ILS assets under management significantly this year, rising 29% from $3.5 billion at the start of 2017 to now sit at $4.5 billion.

It’s impressive growth from the ILS and reinsurance investments manager and positions the firm and its funds well to take advantage of market conditions at the key January 2018 reinsurance renewals.

Third-party capital willing to reload, new capital ready to enter: Morgan Stanley


Third-party capital providers are ready and willing to reload following recent major catastrophe losses, while at the same time new capital is exploring post-event opportunities and in some cases readying its entry into the market, according to analysts at Morgan Stanley.

The analysts said that after meeting with alternative reinsurance capital and insurance-linked securities (ILS) fund managers, the feedback suggests that most of the investors providing the third-party capital are willing to reload, despite the losses suffered.

Страховые Ценные Бумаги: акцент на катастрофических рисках


Страховые ценные бумаги (ILS) – класс активов, связанных с катастрофическими событиями. Они обеспечивают элемент диверсификации для инвестиционных портфелей. Проще: обвал рынка инвестиций никак не связан с природной катастрофой.

Ключевые моменты

  • Страховые ценные бумаги могут быть привлекательной инвестицией, поскольку не связаны с другими классами активов;
  • Недавние ураганы в США увеличили мировой фокус на ILS;
  • В некоторых странах вопросы макроэкономической защиты зависят от уровня охвата страхованием (т.н. страхового проникновения);
  • Нет препятствий по которым ILS не могут предоставлять защиту не только гражданам и организациям, но и правительствам в целом;