Archive for November, 2015

Panelists speaking at the ILS Bermuda Convergence 2015 event in Bermuda yesterday discussed the investor base, how it has changed and will change further going forwards, concluding that it is investors with a longer-term horizon that will shape the ILS market.

The protection gap, consisting of areas of under-insurance or in some cases no insurance protection at all in both mature and emerging markets, is the biggest opportunity for alternative reinsurance capital, ILS and capital markets to play a role, according to Fermat Capital’s John Seo.

Chairman of the Lloyd’s of London insurance and reinsurance market John Nelson gave a speech in Santiago, Chile recently, during which he discussed ILS and alternative capital, cautioning those listening to “be watchful” as it develops and grows.

The UK’s Exeter-based National Weather Service, the Met Office, has released its European Windstorm Hazard Maps, to help insurers, reinsurers and insurance-linked securities (ILS) managers to better analyse and therefore price risk at a local level.

The convergence of the capital markets with insurance and reinsurance, through the growing insurance-linked securities (ILS) market and the availability of efficient, lower-cost capital, provides a “once in a career opportunity,” according to AIG’s Samir Shah.

The rate of growth in the ILS market has slowed, as investors look to maintain a desirable level of return from reinsurance linked investments, leading James Vickers, Chairman of Willis Re, to highlight greater discipline from capital markets investors compared to some traditional reinsurers.

The continued imbalance between supply and demand for reinsurance capital will lead pricing down by up to -5% in 2016, according to Standard & Poor’s and the rating agency does not expect the imbalance to level out over the next year.

Utilising a rated reinsurance model that’s backed by third-party investor capital, as seen with Credit Suisse Asset Management’s (CSAM) Humboldt Re and Kelvin Re, adds efficiency without losing the strategy and spirit of insurance-linked securities (ILS), says Niklaus Hilti.

A report has highlighted the potential for risk models in the insurance and reinsurance industry to cause systemic risk, signalling a need for underwriting discipline alongside advanced and robust modelling capabilities, an area the insurance-linked securities (ILS) space is now embracing.

Bermuda headquartered reinsurer Everest Re sees its fully collateralised reinsurance sidecar Mt. Logan Re Ltd., as core to its strategy for hedging peak exposures in its book, supplemented by the Kilimanjaro Re catastrophe bonds and use of industry loss warranties (ILW’s).