Archive for July, 2018

The first pure wildfire exposed catastrophe bond has come to market, as California focused electrical utility PG&E Corporation (the Pacific Gas and Electric Company) turns to the capital markets and ILS investors as a source of collateralized insurance protection with a $200 million Cal Phoenix Re Ltd. (Series 2018-1) transaction.

Albeit down year-on-year, catastrophe bond issuance in the first-half of 2018 remained impressive driven by a record-breaking Q1 and solid Q2. But while activity is still robust, the continued evolution of the sector will require new regions and lines of business in order to attract more sponsors.

Issuance of new catastrophe bonds and related insurance-linked securities (ILS) in 2018 has now reached $10 billion, as deal flow keeps pace with last year’s records and this year now becomes only the second to see a double-digit volume of new cat bond transactions.

Natural disaster losses around the globe paid for by the insurance and reinsurance industry during the first-half of 2018 came in at just $17 billion, which is down one-third from the prior year but aligned with the long-term average, according to global reinsurer Munich Re.

The impacts of numerous outbreaks of severe thunderstorms characterised by large hail and damaging straight-line winds during the month of June is still being tallied, but broker Aon’s Reinsurance Solutions unit estimates that the economic cost will be around $4 billion, with the insurance industry taking more than $3 billion of the bill.

Kingstone Companies, Inc., a multi-line property and casualty insurance company for the New York and surrounding areas said it has renewed its catastrophe excess of loss reinsurance program at the recent renewals with broader coverage, enhanced terms and reduced costs.

Typhoon Maria has been given a medium chance of causing a significant local insured loss in the landfall region of China that it will affect, while expected torrential rainfall will also exacerbate economic and insured impacts across a wider region including the Yangtze river basin.

The recently completed $350 million Frontline Re Ltd. (Series 2018-1) catastrophe bond transaction, which benefits cedant Frontline Insurance, was the largest cat bond sponsored by a Florida insurer since 2014 and was well-received by investors, the structurer Swiss Re said.

The World Health Organisation (WHO) has said that, following success from the early response and as no new cases have been recorded in recent weeks, it considers the outbreak of the Ebola virus in the Democratic Republic of Congo to pose only a low risk now as it has largely been contained.

Catastrophe risk capital is gaining importance as a measure of capital adequacy and is gaining momentum as a metric for insurance and reinsurance firms to optimise their capital management and profitability targets, suggesting an increasing demand for the capital markets and ILS in providing catastrophe focused capacity.