Catastrophe bonds and insurance-linked securities news

In the insurance and reinsurance market, catastrophe bond issuance levels and activity are becoming a key focus for any investor discussions regarding industry capacity and price, according to equity analysts at Goldman Sachs.

As hurricane Debby slowly moves inland over the Florida Panhandle and into Georgia and beyond, specialist catastrophe bond fund manager Plenum Investments has said it does not expect insured losses from the storm will negatively affect its cat bond funds.

The broad benchmark index for insurance-linked securities (ILS) funds, the Eurekahedge ILS Advisers Index, has delivered a 4.37% return for the first six months of 2024, which is the third best half-year performance in its history.

As hurricane Debby approaches landfall, given the relatively sparsely populated landfall region the insurance and reinsurance industry exposure will be more limited, which has led investment manager Icosa Investments AG to say it does not expect any substantial impacts to catastrophe bonds from the storm.

At the mid-year reinsurance renewals, US primary insurance giant Allstate has shrunk its Florida excess-of-loss tower again, opting for a lower-level of protection in the state, but has continued to build-out its Nationwide protection, adding again to the top-layer of that tower.

AIG believes the collateralized reinsurance market is recovering and is back at its highest level, in limit terms, since 2016. In addition, the company believes it buys roughly 50% of global aggregate capacity provided by the ILS market, according to its CEO Peter Zaffino.

According to reinsurance broker Guy Carpenter, CrowdStrike is not a particularly significant cyber catastrophe event and only represents a “Kitty Cat”, or mid-sized catastrophe loss, while the broker estimates industry losses will be between $300 million and $1 billion.

The Texas Windstorm Insurance Association (TWIA) saw the overall rate-on-line across its reinsurance and catastrophe bond program that is in-force for the 2024 into 2025 period rise to 9.6% and as risk transfer comes with higher costs attached, the insurer of last resort is looking to options to help manage that expense.

The World Bank has approved the Regional Emergency Preparedness and Inclusive Recovery Program (REPAIR), which is designed to boost financial resilience against climate shocks for Eastern and Southern African countries and leverages private market parametric disaster insurance risk transfer alongside its contingent credit DDO solution.

There were no major changes to Conduit Re’s retrocession arrangements around the middle of this year, but the company is always keeping other third-party capital partnerships such as sidecars under review, CEO Trevor Carvey has explained.