Where the new ILS opportunities lie – and how to access them

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ORIGINAL PUBLICATION HERE. INTELLIGENT INSURER WEBSITE PUBLICATION HERE.

In a webinar hosted by Intelligent Insurer’s Re/insurance Lounge, AkinovA CEO Henri Winand and Kirill Savrassov of Phoenix CRetro explored the possibilities for ILS to expand into new geographies and lines of business.

A significant motive for bringing insurance-linked securities (ILS) to new geographies is diversification of portfolios, according to Henri Winand, founder and chief executive officer of AkinovA.

Speaking in an Intelligent Insurer Re/insurance Lounge webinar titled “New domiciles, new risks, new structures: another evolution for ILS”, he noted that while an attraction of ILS is that it is seen as uncorrelated from the capital markets, it has a disadvantage in that portfolios are largely concentrated in North America, and to some extent in Asia.

Briefing – ILS: resilience despite the thrills

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FULL ORIGINAL PUBLICATION HERE

Institutional investors have piled into insurance-linked securities (ILS) with the goal of adding reliable returns and a touch of diversification to their investment strategies. 

  • A series of natural catastrophes has made investors more aware of the risks embodied in insurance-linked securities
  • ILS have proven less liquid than expected in the wake of these disasters
  • Catastrophe bonds are the most traditional and most liquid ILS instrument

A series of natural catastrophes that hit the world in the past three years has taught them that they have incorporated the potential for large losses into their portfolios.

A relatively young asset class, ILS investments have been put to test since the summer of 2017, as a destructive series of hurricanes, earthquakes, floods and wildfires shot insurance losses through the roof. They also affected investments that, to some extent, constitute a bet that catastrophic events will not happen, or at least will not be too severe in terms of property destruction.

ILS increasingly attractive in the face of COVID-19

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ORIGINAL PUBLICATION HERE. INTELLIGENT INSURER OWN WEBSITE PUBLICATION HERE

As an asset class that is uncorrelated with financial markets, provides environmental, social and corporate governance (ESG) advantages and offers good returns in the current low interest environment, insurance-linked securities (ILS) are becoming increasingly attractive, Kirill Savrassov, an ILS and sovereign risk transfer specialist, told Baden-Baden Today.

ILS activity is gaining momentum because COVID-19 has highlighted the benefits of investing in an asset class that is uncorrelated with financial markets, said Savrassov.

“Another important point is that uncorrelation, together with current price increases in the reinsurance market, is making this asset class not only attractive but also reasonably priced, with good returns,” he said.

参数化主权巨灾债券是“一带一路”的保险方式

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2020年9月17日 Intelligent Insurer 原始采访译文。 PDF版本在这里。

通过与“一带一路”倡议相关的项目获得中国投资的中亚和东欧国家，应使用参数化主权巨灾债券来确保自身免受自然灾害的风险。

这是保险连结证券（ILS）和主权风险转移专家基里尔·萨符拉索夫（Kirill Savrassov）的观点。

萨夫拉索夫指出：《中国的“一带一路”倡议对中亚和东欧的全面保护方案提出了更高的要求》。

《中国将数百亿美元投入了该地区的基础设施建设，但实际上，其中连一个项目也没适当地投保物理伤害的险，尽管该地区面临着地震和其他自然灾害的高风险》。

在乌兹别克斯坦，哈萨克斯坦或塔吉克斯坦等国家，问题不是地震是否要发生，而是何时要发生，并且其毁灭力量多大。

自然灾害会破坏中国通过“一带一路”倡议帮助该地区发展的许多基础设施项目。如果建造后这种项目因地震而摧毁，那么东道国仍将欠缴中国的贷款，但是不会从基础设施投资中获取收益。

Lloyd’s launches ‘first of its kind’ parametric BI cover for SMEs

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Lloyd’s has launched a new business interruption policy, which it believes is the “first of its kind” parametric solution designed to protect small and medium sized enterprises (SMEs) against IT disruption or downtime.

The new policy pays out automatically once a company’s IT services – such as cloud, e-commerce or payment systems – are disrupted, reducing the time insurers spend assessing a loss or adjusting a claim.

The product is led by Tokio Marine Kiln (TMK) and supported by other members of Lloyd’s Product Innovation Facility including RenaissanceRe.

“We are thrilled to launch the first ‘off-the-shelf’ parametric insurance product for IT downtime. This is a great milestone for us and we are grateful to TMK, Howden and Lloyd’s Product Innovation Facility for helping us to develop our product and providing us with valuable insights and support along the way,” said Yonatan Hatzor, co-founder and CEO of Parametrix Insurance.

Parametric sovereign cat bonds: the way to insure the Belt and Road

by with No Comment Asset Class / BrochureBelt & RoadCAT BondsCEEChinaCorporate NewsDRR Istanbul colleaguesECIS CAT BondsILSILS Funds/strategies launchInsurance GapIntelligent InsurerParametricPension & Hedge FundsPress on us / Пресса о насRussian CAT BondsSingaporeUN-World Bank-IFCWeather Risk Transfer

ORIGINAL PUBLICATION HERE. PDF VERSION HERE. CHINESE 中文 TRANSLATION HERE .

Countries in Central Asia and Eastern Europe that have been recipients of Chinese investment via projects associated with its Belt and Road Initiative (BRI) should use parametric sovereign cat bonds to insure themselves against the risk of natural disasters.

That is the view of Kirill Savrassov, an insurance-linked securities (ILS) and sovereign risk transfer specialist.

“China’s Belt and Road Initiative has created an even greater need for comprehensive protection solutions in Central Asia and Eastern Europe,” said Savrassov.

“China has spent tens of billions of dollars in infrastructure across the region but practically none of it is properly insured against physical damage, despite the region being at high risk from earthquakes and other natural disasters.

“In countries such as Uzbekistan, Kazakhstan or Tajikistan it is not a question of if an earthquake will hit, but when and how devastating it will be.”

Belt and Road’s opportunities

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ORIGINAL PUBLICATION HERE

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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ORIGINAL PUBLICATION HERE. PDF VERSION HERE

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.

What ILS funds must learn from Irma

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Despite a multitude of other catastrophes in 2018, the single biggest loss event for reinsurers was so-called loss creep from 2017’s Hurricane Irma. Dirk Lohmann of Schroders examines what went wrong and what the industry must learn.

If there were two words to describe an investor’s perception of one of the key drivers of performance for many insurance-linked securities (ILS) managers (and indeed many professional reinsurers) in 2018 they would without a doubt be ‘loss creep’.

During the course of 2018 the loss estimates provided by Property Claims Service (PCS) for Hurricane Irma increased by $8 billion.