Archive for October, 2016

The insurance and reinsurance sector could ultimately face a loss of as much up to $2 billion due to the financial collapse and bankruptcy of Hanjin Shipping this year, according to analysts at Credit Suisse. If that size of loss manifests, it has the potential to seep through to ILS funds investing in specialty risks.

With reinsurers and insurance-linked securities (ILS) players eager to increase efficiency and get closer to the original source of risk, James Slaughter, Senior Vice President (SVP), Director of Global Reinsurance Strategy at Liberty Mutual, expects capital to move further along the value chain.

Reinsurance pricing has been on the decline for a number of years, as regular readers will be all to aware, but during much of that time primary insurance lines still saw rate increases. That could be changing as price expectations start to converge, according to analysts at Credit Suisse.

The CCRIF SPC (formerly the Caribbean Catastrophe Risk Insurance Facility), is set to pay out another $8 million due to hurricane Matthew’s path through the Caribbean, as parametric excess rainfall insurance payouts are now due to four countries.

One of the catastrophe bonds which had traded at a reduced price due to the approach of hurricane Matthew has bounced back. The First Coast Re Ltd. (Series 2016-1) cat bond had traded as low as 62 cents on the dollar on Thursday 6th but bounced back to above par at 102 on Tuesday 11th.

Analysts at J.P. Morgan have said that an approximate $5 billion insured industry loss from hurricane Matthew would see reinsurers front roughly 50% of the bill, and would see Europe’s big four reinsurers call on divergent levels of retrocession.

International insurance and reinsurance industry ratings agency, Standard & Poor’s (S&P), has highlighted the need for reinsurers to innovative solutions and develop strategies to exploit the range of business opportunities across the sector.

Risk modelling firm AIR Worldwide has provided its initial estimate of insurance and reinsurance industry losses from hurricane Matthew, putting the figure somewhere in a range from $2.8 billion to as high as $8.8 billion across the United States and the Caribbean.

The Chief Executive Officer (CEO) of XL Catlin, London, Jonathan Gale, has stressed the requirement of insurers and reinsurers to offer insurance-linked securities (ILS) solutions in order to reduce the overall cost of reinsurance protection.

Primary insurance company loss estimates are now being announced, with the latest being Federated National Insurance (FedNat), which is set to call on its reinsurance panel, while Homeowners Choice Group (HCI) said the loss will not trigger reinsurance recoveries outside of HCI.