Catastrophe bonds and insurance-linked securities news

As the market navigated a very late and prolonged reinsurance renewal season, the usual flurry of start-ups and capital raises were nowhere to be seen.

Health, medical and benefit insurer Aetna’s new Vitality Re XIV Ltd (Series 2023) health insurance-linked securities (ILS) has now priced, with the multiples on offer to investors at or near historic highs for the long-standing series of health insurance linked catastrophe bond deals.

The Ambassador Fund, a US mutual investment fund that was launched with a core focus on catastrophe bonds but that has so far failed to invest in any, sees strong performance potential for cat bond investments, so achieving all-important QIB status and building a diversified cat bond portfolio remains its target.

The catastrophe bond market could see as much as $11.5 billion of new issuance in 2023, but participants are likely to maintain a focus on balancing issuance to available capital, Jean-Louis Monnier, Head Retro & ILS Structuring, Swiss Re Capital Markets told Artemis.

Catastrophe bonds represent a growing portion of the alternative reinsurance capital market at this time, with their perceived benefits for investors helping to promote expanding growth of this segment, Fitch Ratings has said.

Driving home the higher spreads and pricing that are now a feature of the catastrophe bond and insurance-linked securities (ILS) market, is the fact even health, medical and benefit insurer Aetna’s latest Vitality Re XIV Ltd (Series 2023) health ILS deal now looks set to price in the upper-half of initial guidance.

VP Bank AG, a Liechtenstein-based private bank and asset manager, has said that the insurance-linked securities (ILS) investment opportunity has “never been so interesting”, with the highest yields in over a decade now possible, and further revaluation gains in hurricane Ian exposed catastrophe bonds expected.

Hurricane Ian was an important test for the profitability of the global insurance and reinsurance market, according to analysts at Goldman Sachs and their comments read-across positively for the insurance-linked securities (ILS) market as well, as returns there also show the “strength of the cycle working through.”

Elevated, near-record returns and still-evident asset class diversification benefits, leave insurance-linked securities (ILS) and alternative capital in reinsurance poised for strong growth, according to Aon’s Reinsurance Solutions.

Increasingly, non ILS specialist capital is entering the catastrophe bond market, as many investors that have allocated before return, and this is helping to stabilize the market, according to Cory Anger of GC Securities.