Speedwell’s weatherXchange adds support for pricing of zero premium swaps

by Artemis on May 10, 2018

Speedwell Weather, a leading service provider to the weather risk management market, has added support for zero premium swaps within its parametric and index-based weather risk transfer platform weatherXchange, with pricing now available for these instruments.

Speedwell launched its online technology based weather trading platform weatherXchange just over a year ago, enabling protection buyers and sellers to meet and transact parametric or index based weather risk transfer contracts, with the capacity providers signed up to the system being insurers, ILS fund managers, and some of the largest reinsurance firms.

Speedwell also launched an Instantaneous Indicative Pricing service in October of last year, which is calculated using configurable pricing algorithms that are hosted by the risk capacity providers, so they can control their own pricing for index-based weather hedges that they bid for on the exchange.

Now pricing can be configured for zero premium swap weather hedging instruments as well, with indicative swap pricing set to further streamline the process of structuring and price quoting for the weather risk transfer market.

“The launch of Instantaneous Indicative Pricing has been a huge success for the weather market and weatherXchange,” explained David Whitehead Co-CEO of weatherXchange. “Since the launch we have seen a constant stream of new hedgers and broker-advisors approaching the market using these newly developed tools.”

Michael Moreno, Co-CEO of weatherXchange, said, “When we talk to users of the platform the most requested feature is the support of zero premium swaps. These structures are commonly used tools by the energy markets to hedge weather risk. This technological breakthrough will further improve market efficiency while improving the workflow of both hedgers and brokers.”

The Instantaneous Indicative Pricing service has five companies providing the service: AXA Global Parametrics a division of the international insurer; ILS fund manager Coriolis Capital Limited; MSI GuaranteedWeather a subsidiary of Mitsui Sumitomo Insurance Co., Ltd.; global reinsurance firm Munich Re; and Sompo Global Weather which is part of Sompo International.

The addition of zero premium swaps to the instruments that can be priced and traded on weatherXchange means more options for weather protection buyers, as well as more ways to deploy capacity for the capital providers backing the deals.

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