Archive for January, 2015

Health care insurance and benefits firm Aetna has hailed the improved “capital efficiency” and reduction in its “weighted average cost of capital” that it has achieved with the successful completion of its sixth medical benefit claims linked Vitality Re VI Ltd. (Series 2015-1) ILS.

The expected staying power of ILS, alternative and third-party reinsurance capital signals “structurally lower returns” for reinsurers, but should also eliminate some of the volatility and tail risk in the traditional market, according to forecasts from analysts.

Extreme weather events are regarded as the second most prevalent threat to global stability in terms of likelihood, following interstate conflict with regional consequences, according to analysis by the World Economic Forum.

The secondary market for trading in catastrophe bonds and ILS proved to be a “valuable source of liquidity” in 2014, as investors sought to free up capital to invest in the year’s record new issuance, according to Aon Benfield Securities.

The leading insurance and reinsurance rating agencies once again have mixed views of the latest proposed reinsurance M&A deal, which saw AXIS Capital and PartnerRe announce an $11 billion “merger of equals” yesterday.

A new web-based earthquake risk assessment platform called OpenQuake has been launched by the Global Earthquake Model (GEM) Foundation, enabling a greater understanding of these risks for the reinsurance, ILS and catastrophe bond market.

The combined company that emerges out of the merger of AXIS Capital and PartnerRe, will have an “enhanced ability to partner with other capital providers” including third-party reinsurance capital which it will use to “deliver expanded client solutions.”

The question ‘how big is big enough’, in order to maintain relevance in the currently challenging reinsurance market as it faces structural evolution, is not a simple one to answer, especially as ‘big enough’ keeps getting bigger with every announced M&A deal.

Once again the last seven days has seen a number of short-dated, soon to mature catastrophe bonds, which offer higher yields than recent primary issuance, traded in the secondary market, as investors continue to be attracted to these opportunities.

Two more of the big Bermudian reinsurance players have announced a merger. AXIS Capital and PartnerRe have agreed to combine to form an $11 billion reinsurance player, which they hope will strongly position them to respond to structural changes in the market.