Catastrophe bonds and insurance-linked securities news

For low and middle income countries with an elevated exposure to natural disasters, catastrophe bonds can be a useful tool for financial planning, but the public sector side of the market needs to grow in order for governments to fully realise the potential benefits, according to analysts at DBRS Morningstar.

The average spread across newly issued catastrophe bonds has now reached an all-time-high in 2023, as data recorded by Artemis now shows that both the average coupon and the average spread above expected loss of cat bonds entered in the Artemis Deal Directory this year are at record levels.

Direct-to-consumer and fast-growing insurtech company Kin Insurance is aiming to reduce the pricing on its new catastrophe bond issuance, with the spread guidance dropping for its Hestia Re Ltd. (Series 2023-1) transaction.

Catastrophe bond funds in the UCITS format have reported very strong returns year-to-date, with the average return across the main UCITS cat bond strategies now reaching 2.62% as of March 3rd.

The Danish Red Cross sponsored volcano catastrophe bond is being watched, as Indonesia’s Mount Merapi volcano erupted over the weekend.

Alpina Capital, the asset manager that took over the management and distribution of the Falcon Private Bank catastrophe bond funds, has hired Dr. Gregor Gawron, an experienced executive in the insurance-linked securities (ILS) space and a former manager of that cat bond strategy a decade ago.

Florida’s Citizens Property Insurance Corporation looks set to more than double the size of its new catastrophe bond issuance, as the target for its first industry loss trigger cat bond, the Lightning Re Ltd. (Series 2023-1) issuance, has now been lifted to between $400m and $500m, Artemis has learned.

K2 Advisors, the hedge fund focused investment management unit of Franklin Templeton, is bullish on the outlook for the catastrophe bond market in 2023, but longer-term believes investor needs must continue to be met.

As the California Earthquake Authority (CEA) fast approaches one of its major reinsurance renewals for the year at April 1st, the earthquake insurer has seen the risk transfer program shrink a little further to just under $8.1 billion by January 31st.

One tranche of the FloodSmart Re catastrophe bond program has had its maturity extended to allow for further development of the NFIP’s flood insurance losses from hurricane Ian, Artemis has learned.