Catastrophe bonds and insurance-linked securities news

Two factors are currently being looked on very favourably by any institutional investors that are researching the insurance-linked securities (ILS) asset class, the stability of an ILS investment managers’ assets over recent years, and importantly how the amount that was actually deployable has fluctuated.

Typhoon Nanmadol’s impacts in Japan are not expected to result in insurance and reinsurance market losses high enough to trouble any catastrophe bonds, according to Plenum Investments.

Many of the world’s largest pension fund investors are actively seeking out diversification opportunities, as they shift portfolios in light of global economic volatility, which could serve to further raise the profile of ILS investments.

The Putnam Re Pte. Ltd. (Series 2021-1) catastrophe bond that was sponsored by St. Johns Insurance Company fell to a default as a result of the insurers failure, and in an unusual turn of events investors holding the notes experienced a small loss of principal on redemption, as they shouldered some of the costs.

Relatively strict asset allocation protocols could become a driver for some investors to downsize their allocations to insurance-linked securities (ILS), as broader macro-economic effects and capital market volatility mean some allocations could have to be reduced, to stay within their defined thresholds.

The calculation agent for the Philippines government’s World Bank issued IBRD CAR 123-124 catastrophe bond has now completed its full analysis on the impacts of tropical storm Megi (locally known as storm Agaton), finding that neither the wind nor rain parameters have triggered any payout from the bond.

Broking group Aon is expecting a strong chance for another record year of issuance in the catastrophe bond market, with the pipeline of potential deals that could get executed being as long as it has ever been for the firm.

Aon has made two senior appointments within its Aon Insurance Managers arm in Bermuda, with a new Managing Director of the operation and a new Head of its White Rock activities on the island.

As the insurance-linked securities (ILS) market continues to reset itself after a number of years of heavy catastrophe losses, growth is likely to be more prominent in areas such as catastrophe bonds and top-layer peak peril strategies, that have displayed more consistent performance, Twelve Capital’s Marcel Grandi believes.

According to data from AM Best, just $850 million of catastrophe bonds and other insurance-linked securities (ILS) are held by US insurers in their investment portfolios, a surprising low number given the evident diversification they can offer.