Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Best of Artemis, week ending 18th December 2011


It’s been another busy week of news in the markets we cover on Artemis, here’s your Monday morning chance to catch up on the top news you may have missed. We’ve seen further discussion on enabling flood risk to be hedged as derivatives or issued as catastrophe bonds, the CEA begin planning for their next cat bond while TWIA decided not to pursue one due to the costs at this time. Catch up here with the top ten most read stories on Artemis.

Top ten most viewed articles on, week ending 18th December 2011:

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  1. Texas Windstorm Insurance Association rejects catastrophe bonds for 2012
    TWIA have decided not to pursue a proposal to issue their first catastrophe bond to help them achieve greater diversity in their sources of reinsurance. Cost is the main reason as TWIA is not particularly well funded at the moment due to having been put in administrative financial oversight. They hope to revisit the proposal in mid-2012.
  2. Thailand looking to hedge flooding with water-level or rainfall derivatives
    The Thai Securities & Exchange Commission are discussing whether they could introduce ways to hedge the risk of future floods, such as the country has just suffered. The discussions are revolving around the use of derivatives to hedge either rainfall or water levels.
  3. Catastrophe bonds cited as alternative investment to ‘unexciting government bonds’
    Cat bonds are said to be a safer bet for those seeking a better return than government bonds are able to offer at the moment. Cited as unexciting, government bonds don’t offer any real return at the moment where as cat bond investors can hope to achieve at least 7%+.
  4. PERILS expands to include UK flood industry loss coverage
    PERILS AG, the provider of European windstorm industry loss data and indices, is to branch out into flood risk starting in the UK. They aim to provide the same services for flood risk, offering industry loss data and creation of indices which can be used in ILW or cat bond transactions.
  5. Catastrophe bond market proves resilient through testing 2011
    Swiss Re says that the cat bond market has coped well given all of the obstacles which were put in its way during 2011. Huge natural catastrophes, losses, model changes and disruption in the wider financial markets have all hindered the market this year but still issuance has been good and the market seems buoyant.
  6. CEA plans for January catastrophe bond of up to $300m
    The California Earthquake Authority are seeking to return to the cat bond market in early 2012 and could issue as much as $300m in another Embarcadero Re transaction.
  7. Willis and Chadbourne comment on their roles in Golden State Re workers comp cat bond
    Broker Willis and lawfirm Chadbourne both played roles in the recently completed Golden State Re cat bond deal. Their comments on the roles and some analysis can be found in this article.
  8. British Airways offloads another £1.3 billion of longevity risk
    BA double their longevity risk hedge by offloading another £1.3 billion worth of liabilities to Rothesay Life.
  9. How secondary cat bond pricing reacted to approaching hurricane Irene
    An interesting graph which shows how the secondary market prices of certain exposed cat bonds moved as hurricane Irene approached the U.S. east coast.
  10. How secondary cat bond trading volumes react to disasters
    A second graph which shows how the volumes of cat bonds traded by Swiss Re Capital Markets in the secondary markets fluctuated during 2011 as different disasters and catastrophes threatened or struck.
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