Catastrophe bonds a vital part of insurers “financial tapestry” – John Doak


The Commissioner of the Oklahoma Insurance Department, John Doak, has underlined the important role catastrophe bonds play in the “financial tapestry” of insurers. A view supported by the increasing volume of ILS capacity utilised within insurers’ reinsurance programmes.

Despite the recent rise of the collateralised reinsurance sector, catastrophe bonds likely remain the most dominant force of the expanding insurance-linked securities (ILS) space, underlined by the record-breaking volume of issuance witnessed in Q1 2016.

“As the dominant form of ILS, catastrophe bonds are a critical piece of the financial tapestry that allows insurers to remain solvent and successful,” said Doak, in a recent interview with Clear Path Analysis.


Solvency II equivalence finally official


It’s official: Bermuda has Solvency II third-country equivalency, as of today.

That means the European Union considers the standard of the island’s insurance regulation to be equivalent to its own.

In November last year, the European Commission recommended that Bermuda should be considered as in line with the tough new insurance rules being adopted across the 28-country bloc.


Aon ILS Indices outperform all fixed-income benchmarks in 2015


In 2015 the Aon ILS Indices, which track the performance of investment baskets of catastrophe bonds, all outperformed a number of comparable fixed income benchmarks, as well as beating the S&P 500 Index, the latest report from Aon Securities shows.

No matter how much reinsurance rates have declined and catastrophe bond pricing has dropped an investment in ILS and cat bonds continues to outperform comparable benchmarks, often with lower volatility as well.

Insurance Linked

The alternative twelve days of Christmas


A seasonal round-up of the big stories of 2015. Happy holidays.

Atlantic_hurricane_season_summary_mapTwelve tropical depressions

As predicted by Tim Hall and others, Atlantic storm activity was slightly below the long term average. None of the storms were sufficiently bad to affect the reinsurance market. The relatively low level of property damage included over $500m of damage from Erika in Dominica, and $60m of damage from Joaquin in the Bahamas and Bermuda.

The twelve were: Hurricanes Danny, Fred, Joaquin and Kate; Tropical Storms Ana, Bill, Claudette,  Erika,  Grace, Henri, and Ida plus Tropical Depression Nine.


Alternative reinsurance capital growth outpaced traditional: Aon Benfield


Alternative capital continues to grow its presence in the global reinsurance industry, rising by 6% during the first-half of 2015 to $68 billion, while traditional capacity fell by 3%, according to international reinsurer Aon Benfield.

Alternative capital’s share of the global reinsurance market’s capacity totalled $68 billion at June 30th, 2015, representing a 6% increase from the end of 2014 and is “reflected in near record issuance levels of catastrophe bond issuance, further expansion of fully collateralized placements and growing utilization of ‘sidecar’ vehicles,” said Aon Benfield.

ILS fund-of-funds ILS Diversified Ltd. outperforms market in first month


ILS Diversified Ltd., a fund-of-funds which invests in the insurance and reinsurance linked investments market via allocations to insurance-linked securities (ILS) funds, has outperformed the wider ILS fund market in its first month of operation.

ILS Diversified Ltd. was launched on 1st April by ILS Advisers, the firm behind the Eurekahedge ILS Advisers Index. The Bermuda domiciled fund actively invests in a selected group of ILS funds, aiming to achieve the best possible returns across the market.