Catastrophe bonds and insurance-linked securities news

The development of a cyber insurance-linked securities (ILS) market is underway, but given the differences in how investors and portfolio managers can diversify within cyber risk, this will likely mean a “different distribution of capital,” is seen, Gallagher Re executives told Artemis.

Independent investment management giant Cambridge Associates LLC is bullish on the outlook for insurance-linked securities (ILS) investing in 2023, believing the higher yields on offer provide a good return opportunity relative to risk. But they caution that investors should review the ILS asset class on a regular basis.

Coastal property insurance underwriter SURE appears to have been very well-received in the catastrophe bond market for its second issuance, upsizing its proposed $200 million Gateway Re Ltd. (Series 2023-1) transaction by roughly 78%, to secure $355 million of named storm reinsurance protection from the capital markets.

The U.S. Federal Emergency Management Agency (FEMA) has returned to the catastrophe bond market and is aiming to secure at least $250 million of reinsurance protection for its National Flood Insurance Program (NFIP), through issuance of a FloodSmart Re Ltd. (Series 2023-1) cat bond.

Catastrophe bond, insurance-linked securities (ILS) and reinsurance investment manager Twelve Capital has said that its exposure to the earthquakes in Turkey through private ILS contracts appears “very limited”, with no impact expected to its products.

According to the final year-end data for the Eurekahedge ILS Advisers Index, an equally weighted index that tracks the performance of 26 constituent insurance-linked investment funds, on average, pure catastrophe bond funds performed the best in 2022, while the gap between the top and bottom performing ILS funds was particularly significant.

The devastating magnitude 7.8 earthquake that struck southern Turkey this morning is unlikely to have a noticeable effect on the performance of catastrophe bonds, given Turkish quake risk is only a minor component of some retrocessional deals, Plenum Investments has said.

Insurance-linked securities (ILS) and catastrophe bond funds only fell by -2.16% on average for the full-year 2022, despite the significant losses the industry suffered from major hurricane Ian, an Index of ILS fund performance shows.

Specialist insurance-linked securities (ILS) and reinsurance investment manager Twelve Capital believes the catastrophe bond investment opportunity to be particularly compelling for 2023.

Following the enactment of significant property insurance legislative reform in Florida and after giving these reforms time to bed-in, catastrophe bonds covering risks in the state are likely to become even more attractive to invest in, according to Dirk Schmelzer of Plenum Investments.