Archive for January, 2016

Pressure on insurance and reinsurance companies to enter into mergers or acquisitions (M&A) is expected to continue, as pressure on earnings remains. However the consolidation trend in 2016 is expected to be slower than seen last year, according to Fitch Ratings.

Property casualty insurance holding company United Insurance Holdings Corp. (also known as UPC Insurance) has swapped its per-occurrence catastrophe reinsurance program for a new one-year new aggregate excess of loss reinsurance program, at the January renewals.

Reserve releases for property & casualty insurance and reinsurance companies are expected to shrink over the next few years, with what was 15% of operating income on average falling to 11%, presenting a real risk to P&C re/insurer earnings, according to Morgan Stanley analysts.

International reinsurance giant Swiss Re’s Capital Markets (SRCM) trading desk witnessed its highest volume of activity since 2010, at $950 million of trades from more than 90 separate tranches of catastrophe bond notes during 2015, according to a report from the firm.

Continued market pressures across the insurance and reinsurance landscape in 2015 have, as expected, persisted into 2016, but despite pricing in the global reinsurance sector declining still, analysts at JP Morgan feel the larger European players are still earning their cost-of-capital.

As investors in insurance-linked securities (ILS) and catastrophe bonds become increasingly willing to assume more risk, in exchange for a higher yielding investment opportunity in reinsurance risk, this presents “an interesting value proposition to sponsors” according to GC Securities.

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.

Insurance firm AIG has highlighted the increasing use of reinsurance transactions as one of the ways it will seek to improve its performance, in order to return capital to shareholders and as it hopes to avoid being broken up.

Specialist insurance and reinsurance linked investment manager Leadenhall Capital Partners LLP has launched its first UCITS investment fund towards the end of 2015, helping to take its total ILS assets under management to over $2.4 billion.

The Valley and Butte wildfires in California have been confirmed to have caused an insurance industry loss of $1 billion or greater, with around $700m from the Valley fire and $300m from Butte, adding to the worst wildfire year since 2007 in the U.S.