Catastrophe bonds and insurance-linked securities news

As the capital markets, insurance-linked securities (ILS) specialist managers and institutional investors get more familiar and comfortable with investing in cyber insurance risk, there is a chance we see a new breed of more tech-led investors emerge and become a core of the cyber ILS asset class, Gallagher Re believes.

Artemis has learned that another catastrophe bond from the Residential Re series that provided USAA with a collateralized source of aggregate catastrophe reinsurance protection has had its maturity date extended, following a return of half the outstanding principal to investors that totalled $30 million.

A new parametric earthquake catastrophe bond transaction with a $100 million initial target, named Acorn Re Ltd. (Series 2023-1), will be the first in this series where its coverage will overlap with an existing issuance, presumably reflecting a desire to stagger maturity of catastrophe reinsurance coverage for the beneficiaries.

US primary insurer The Hanover Insurance Group, Inc. has lifted the target for its new Commonwealth Re Ltd. (Series 2023-1) catastrophe bond to $150 million, while at the same time the price guidance range has been narrowed, we understand.

Conduit Re, the Bermuda headquartered global reinsurance company that launched for the 2021 underwriting year, is targeting lower pricing for its first and still $100 million Stabilitas Re Ltd. (Series 2023-1) catastrophe bond, that seeks to secure retrocession from the capital markets for the company.

Catastrophe bond funds in the UCITS format are averaging approximately 6.20% returns year-to-date in 2023, while over a 12-month horizon the average return is now 3.57%, even accounting for major hurricane Ian’s losses in Florida.

Analysts from investment bank Berenberg are estimating as much as $8 billion of alternative reinsurance and insurance-linked securities (ILS) capital has been raised year-to-date, which is a significant amount and far overshadows new capital entering the traditional market.

The California Earthquake Authority (CEA) has increased the target size for its latest catastrophe bond , with now up to $425 million of earthquake reinsurance sought from the Sutter Re Ltd. (Series 2023-1) issuance.

Because the first catastrophe bond sponsored by the Toka Tū Ake EQC, or New Zealand Earthquake Commission, was structured to meet its Boards ambitions of being “complementary” to the rest of its reinsurance tower, it sets the scene for future issuances, EQC’s CEO and Head of Risk Financing told Artemis in an exclusive interview.

Vermont Mutual Insurance Company has returned to the catastrophe bond market, seeking to sponsor a Baldwin Re Ltd. (Series 2023-1) cat bond, through which it aims to secure $100 million in multi-year collateralized reinsurance to cover losses from multi-peril events in north east US states.