Catastrophe bonds and insurance-linked securities news

At the end of 2022, the Bermuda Stock Exchange (BSX) was home to more than 89% of the world’s catastrophe peril linked reinsurance securities, which amounted to roughly $34 billion of insurance-linked securities (ILS) risk capital outstanding.

The insurance-linked securities (ILS) market is undergoing a “dramatic repricing”, leading to a situation that Alex Conyers of Neuberger Berman explains as “an exceptional opportunity for investors looking for non-correlated returns.”

Catastrophe bonds in the UCITS format have continued to add assets under management (AuM) at the start of 2023, with a further almost $200 million gain in January, taking the combined assets of those cat bond funds tracked to almost $9 billion.

Global reinsurance company Ariel Re is looking to slightly upsize its latest Titania Re Ltd. (Series 2023-1) catastrophe bond deal and, in a rare occurrence for recent months, the cat bonds price guidance has been reduced, so it now has the potential to price at or below the low-end of the initially marketed range.

Insurance industry losses from the devastating earthquake that struck Turkey and Syria earlier this week are anticipated to fall around the US $1 billion mark, with reinsurance capital set to bear the majority, Fitch Ratings believes.

Spreads in the catastrophe bond market, in terms of both new primary cat bond issuance and secondary marks, appear to have stabilised, signalling the market finding a new equilibrium at higher premiums, Plenum Investments has said.

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.