Catastrophe bonds and insurance-linked securities news

The latest catastrophe bond from coastal property managing general underwriter SageSure looks likely to price at the bottom-end of initial guidance, as the firm seeks a lower spread for its first county-weighted aggregate retrocessional cat bond, the $50 million Gateway Re Ltd. (Series 2023-3) issuance.

Delivering a welcome speech this morning at the Artemis ILS Asia 2023 conference in Singapore, Cheng Khai Lim, Executive Director, Financial Markets Development Department, Monetary Authority of Singapore (MAS), highlighted the need for greater structuring and deal capabilities in Asia, as Singapore continues to streamline its insurance-linked securities (ILS) regulatory regime.

With property catastrophe reinsurance rates and pricing having soared in recent months, rating agency AM Best sees this as a potential headwind for the burgeoning non-cat insurance-linked securities (ILS) segment, as investors focus may shift back to catastrophe risks.

The Chief Executive Officer (CEO) of full-stack homeowners property insurtech, Slide Insurance Company, is pleased that the company was able to complete the issuance of its second catastrophe bond at reduced pricing, as the firm strengthened protection for policyholders during the Atlantic hurricane season.

After a very busy first-half for the catastrophe bond market saw issuance of property cat bonds reach a new high of $9.7 billion, the Artemis community is forecasting the market will remain busy through the rest of 2023.

The BofA Securities analyst team say they are increasingly constructive on the reinsurance sector, one reason being that alternative capital growth is not being driven by the collateralized side of the ILS market, while catastrophe bonds are seen as a more compatible instrument and complementary to traditional reinsurance.

The issuance of Beazley’s $45 million Cairney cyber catastrophe bond, and Hannover Re’s $100 million, Stone Ridge Asset Management-backed retrocession cyber quota share arrangement, “represent the potential for a broader reinsurance source for the risk,” according to Fitch Ratings.

Capital raised in reinsurance and insurance-linked securities (ILS) year-to-date remains far below the level required to threaten the current hard market cycle, according to analysts at J.P. Morgan.

Reflecting investor sentiment and where capital is flowing to in the insurance-linked securities (ILS) market, asset manager Amundi US has been growing its new Pioneer Cat Bond Fund strategy, but the manager’s Pioneer ILS Interval Fund has continued to shrink.

Catastrophe bond funds in the UCITS format experienced a very strong end to the first-half of 2023, with June seeing them deliver an average return of almost 1.9%, which took the H1 2023 average UCITS cat bond fund performance to almost 8.2%.