Catastrophe bonds and insurance-linked securities news

The second session at our Artemis London 2022 conference on September 6th featured a panel discussion titled “Filling the Gaps”, where participants discussed climate and disaster risk, as well as parametric catastrophe bonds.

Before hurricane Ian devastated western Florida, the U.S. Federal Emergency Management Agency (FEMA) had already begun the process towards a January 2023 renewal of the National Flood Insurance Program’s (NFIP) traditional reinsurance tower.

Universal Insurance Holdings, the Florida headquartered primary insurance carrier, has pre-announced an expectation that it will suffer around $1 billion of gross losses after hurricane Ian, with the impact to fall well within its reinsurance tower that provides coverage to just over $3 billion.

Hurricane Ian is expected to be the largest single insurance industry loss event ever witnessed, with the final bill estimated to be above $75 billion once LAE is factored in, according to analysis from Stonybrook Capital.

Credit Suisse Insurance Linked Strategies Ltd., the dedicated ILS fund management and investment arm of the global investment bank, has estimated that industry losses from hurricane Ian will fall in a range from $45 billion to $65 billion, with a best estimate of $54 billion.

Louisiana Citizens Property Insurance Corporation, the non-profit residential and commercial property insurer for those who cannot access private market insurance in the state, has had a steep 63% residential property insurance rate increase approved by the regulator.

The New Zealand Superannuation Fund (NZ Super Fund), one of the government pension providers in that country, has told a publication that it has initially marked down its catastrophe bond fund investments 9% after hurricane Ian, but cautioned that the range of potential outcomes for its broader ILS portfolio remains “wide”.

The insurance-linked securities (ILS) market’s product offering is particularly attractive at this time, helped by reinsurance pricing at higher levels and the significant effort that has gone into re-underwriting portfolios, Luca Albertini, CEO of Leadenhall Capital Partners explained to Artemis recently.

We wanted to provide a list of catastrophe bond names, for those transactions that are currently felt to be most at-risk of losses after major hurricane Ian’s landfall in Florida.

The Ambassador Fund, a US mutual investment fund that was launched to have a core focus on catastrophe bonds, has begun to deploy some initial capital it has raised, but with the deployment being to corporate bonds of insurance and reinsurance companies, as well as one allocation to the preferred notes of what may be […]