Catastrophe bonds and insurance-linked securities news

The California Earthquake Authority (CEA) has elected to significantly upsize its latest catastrophe bond issue we can report, with its new Ursa Re II Ltd. (Series 2020-1) transaction now priced at $775 million in size, more than three times the initial amount of notes offered to investors.

Essent Guaranty has returned to the capital markets in recent weeks with a successful new issuance of mortgage insurance-linked notes, as a Radnor Re 2020-2 Ltd. transaction helped it add $399.2 million of excess of loss mortgage reinsurance backed by capital market investors.

The Government of Jamaica will continue to work alongside the World Bank and other multi-lateral groups to increase its disaster insurance protection this year, even though its priority is a swift economic recovery after the Covid-19 pandemic.

Whether an asset class has positive ESG (environmental, social or governance) characteristics is one of the hot topics of the investing world, so naturally a topic of focus in insurance-linked securities (ILS) at this time. But it’s more than just a branding exercise in the ILS market, panellists made clear today.

The Pioneer ILS Interval Fund, a dedicated insurance-linked securities (ILS) focused mutual investment fund strategy managed by Amundi Pioneer Investment Management, is anticipating its largest subscription window of the year from a capacity perspective.

The New Zealand Superannuation Fund (NZ Super Fund) has rejected any investments into wildfire insurance and reinsurance within its insurance-linked securities (ILS) allocations, saying that because of climate change it feels the risk is mispriced.

Hurricane Delta’s impacts on the Yucatan Peninsula of Mexico and also the United States Gulf Coast are unlikely to cause direct losses for any catastrophe bonds, but could further erode some aggregate cat bond deductibles, according to specialist ILS investor Plenum Investments.

Hurricane Delta has now intensified into the third major hurricane of the 2020 Atlantic storm season and with further strengthening in the forecast this storm could pose a test for the World Bank issued FONDEN 2020 catastrophe bond sponsored by the Mexican government.

Amid the ongoing expansion of the market for sustainable investment, there’s an opportunity for the insurance-linked securities (ILS) sector to show its alignment with environmental, social and governance (ESG) factors, according to law firm Carey Olsen.

In announcing its first-half results this summer, global reinsurance giant Swiss Re explained that it is experiencing and taking advantage of “significant rate hardening” across natural catastrophe exposed business lines.