Archive for December, 2015

The catastrophe bond market is expected to continue to expand its remit in 2016, as sponsors look to leverage capital markets risk transfer for a wider range of risks and perils, while ILS investors look for new diversification opportunities.

The growth of alternative capital in the reinsurance industry has had a “substantial influence” on risk tolerances, particularly among P&C insurance and reinsurance players, according to Kroll Bond Rating Agency (KBRA).

With reinsurance market pressures set to persist, industry executives and experts predict further rate declines at the upcoming January renewals. And while analysts and Keefe, Bruyette and Woods (KBW) agree, they believe that rate declines at 1/1 2016 may not be as steep as initially feared.

The Philippines has secured a new catastrophe contingent line of credit, to support its management of the risks posed by natural disasters, with a $500 million Second Disaster Risk Management Development Policy Loan with a Catastrophe-Deferred Drawdown Option (CAT-DDO 2).

French reinsurance firm SCOR has seen its latest catastrophe bond, Atlas IX Capital DAC (Series 2016-1), grow by 20% during marketing to reach $300 million in size, while at the same time the pricing has been moved to the top end of initial spread guidance.

Insurance-linked securities (ILS) and catastrophe bonds as an asset class can increasingly provide  sophisticated investors with a new type of responsible investment, creating another attractive angle to the investment case for ILS, according to Mercer.

The market for longevity swaps and risk transfer is forecast to be busy again in 2016, by Aon Hewitt, with a continued focus on bringing longevity reinsurance capacity more efficiently to smaller pension funds as well as larger deals.

The impact of excess capacity, benign losses, low interest rates, and heightened competition, combined with further rate declines at the upcoming renewal season will be evident in next year’s reinsurance company results, according to Moody’s Investors Service.

A majority of shareholders in the London and Bermuda stock exchange listed reinsurance and insurance linked securities (ILS) investment fund, the Blue Capital Global Reinsurance Fund, have voted in favour of a new investment policy and performance fee modification.

Insurance and reinsurance ratings agency A.M. Best, has maintained its negative outlook for the reinsurance sector in 2016 amidst ongoing market pressures, also suggesting that once disaster strikes the true impact of current market conditions “may be uglier than some believe.”