Best of Artemis, week ending 29th July 2012


The summer holiday season is well underway but the catastrophe bond and insurance-linked securities market remains active with a high volume of news being released. We hope these weekly updates provide a useful catch-up for those returning from holidays and give others a way to catch-up on any news they’ve missed over the last week. Here are the ten most popular articles from the last seven days on Artemis.

Top ten most viewed articles on, week ending 29th July 2012:

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  1. Third-party capital providers to play growing role in catastrophe reinsurance market
    The latest report from Willis Capital Markets & Advisory (WCMA) looks back at cat bond and ILS issuance in Q2 2012, concludes that going forwards the catastrophe reinsurance market is going to see continuing and growing involvement of third-party capital providers.
  2. Comparing risk premium and expected loss of U.S wind and non-U.S. wind catastrophe bonds
    We’ve written about these two features of the catastrophe bond market before. The risk premium refers to the coupon or interest payment made to investors in return for taking on the risk in a transaction. The expected loss refers to a measure which denotes the probability of a loss occurring on a cat bond deal and so denotes how risky a transaction is perceived to be.
  3. Innovative Chinese transaction wins Weather Risk Management Deal of the Year award
    The winner of an industry award is a weather risk transaction from China which saw reinsurer Swiss Re help a hydropower company hedge some of its precipitation related risks.
  4. Eurozone breakup could impact catastrophe bonds and insurance-linked securities
    Just how uncorrelated catastrophe bonds and insurance-linked securities are with the wider financial markets is a point worth considering. Of course, as any sensible observer realises, no financial instrument can be truly uncorrelated from market impacting events and catastrophe bonds and ILS are no exception.
  5. Swiss Re’s Vita Capital V mortality-linked catastrophe bond upsizes significantly
    Swiss Re are marketing the sixth issuance in their series of Vita mortality-linked catastrophe bond (or insurance-linked security) deals, Vita Capital V Ltd.. We revealed that the transaction has increased in size significantly, almost tripling in size during the marketing phase.
  6. U.S. Treasury studies contingent capital solutions as pre-crisis bailout prevention tool
    An initiative established under the Dodd-Frank Act by the U.S. Treasury to look at systemic risks and financial stability, the Financial Stability Oversight Council (FSOC), has just completed a study of contingent capital solutions to see if they are tools which could be leveraged to ward off financial crisis.
  7. RMS to use long-term rate model of hurricane activity for catastrophe bond transactions
    Risk modelling firm RMS have announced that as part of an initiative they are undertaking to help educate on the uncertainties inherent in catastrophe modelling they are moving to a new way of presenting hurricane risk within insurance-linked securities and catastrophe bond transactions.
  8. Catastrophe bond price return index starts to look more seasonal
    In the last fortnight the unseasonal rise of the catastrophe bond price return index has stopped and the trend is now more in line with how we would expect the index to be moving at this time of year, during the U.S. hurricane season.
  9. Nathan Ltd. not downgraded over total return swap counterparty downgrade
    You’d be forgiven for thinking that the spectre of the total return swap counterparty vanished from the catastrophe bond and insurance-linked securities market a number of years ago after Lehman Brothers collapse caused the default of a number of cat bonds they were a swap counterparty to. However there are still deals using a total return swap as part of their collateral arrangements and a development reminds us how total return swaps made the market more correlated with the broader financial markets.
  10. CEA’s latest Embarcadero Re catastrophe bond doubles in size to $300m
    We revealed that the latest cat bond from the California Earthquake Authority, Embarcadero Re Ltd. (Series 2012-2), has doubled in size to use up all of their budgeted $300m which they set aside for cat bonds in 2012.
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