Archive for January, 2016

An innovative new pandemic business interruption insurance product launched by insurance and reinsurance group AXIS, provides a very good example of how pandemic risk transfer could be structured in a manner suitable for the ILS market and its investors.

The latest risk barometer from Allianz, its fifth in the series, reveals that organisations still perceive Business interruption (BI) and supply chain disruption as the main threat to operations, with 51% of respondents citing a fear that natural catastrophes will cause BI losses in 2016.

The catastrophe bond market reached a new high at the end of 2015, with the level of issuance during the year outstripping a record high level of maturities, resulting in the market reaching the end of the year with cat bonds on-risk standing at an all-time high, according to Aon Securities.

Winter storm Jonas, the first severe such storm of the year, will strike the U.S. in the coming days, with impacts expected from the mid-South and Ohio Valley to the East Coast. Many metropolitan areas will see heavy snowfalls, high winds and there is the potential for coastal storm tide and surge flooding.

The fourth in our series of articles featuring leading figures in insurance-linked securities (ILS) and reinsurance on the market as we move into 2016 features Susan Lane, co-CEO of Tokio Solution Management Ltd.

ILS investors subscribing to allocate capital to the $300m Galileo Re Ltd. (Series 2016-1) international multi-peril catastrophe bond issuance from XL have given a clear signal that the appetite for higher-yielding notes is strong.

Risks to fundamentals in the non-life insurance and reinsurance sector are “skewed to the downside” according to analysts from Bernstein, but still the stock market has not yet priced in the fact that many companies are destined to deliver lower returns across the cycle in future.

The varied structures and growing maturity of the insurance-linked securities (ILS) market has the potential to unlock new sources of risk, but innovation and a willingness to venture into the unknown is required, according to ISO’s Tom Johansmeyer.

The outbreak of infectious disease poses a very real and serious threat to global financial stability, with a new report claiming that yearly expected losses from potential pandemic risks top $60 billion, underlining the need for greater involvement from the entire risk transfer landscape.

The insurance and reinsurance industry should expect further disruption as financial sectors with inefficient cost structures and high capital usage face threats from new entrants, business models, technology and alternative sources of risk capital, according to Oliver Wyman.