Catastrophe bonds and insurance-linked securities news

Eclipse Re Ltd., the Horseshoe managed private syndicated collateralised reinsurance note and private cat bond platform, has completed two new transactions, amounting to just under $56.6 million of risk capital issued around the mid-year renewal season.

An update to the Bermuda Monetary Authority’s (BMA) guidance notes on special purpose insurers (SPI’s), the most commonly used structure for transacting insurance-linked securities (ILS) and collateralised reinsurance, lays out the regulators position on key issues related to collateral rollover, release of collateral and also the subject of clawback.

Italian primary insurance company UnipolSai Assicurazioni S.p.A. demonstrated a long-lasting commitment to engaging with the insurance-linked securities (ILS) market with its recently completed EUR 100 million Azzurro Re II DAC (Series 2020-1) catastrophe bond, according to executives at Willis Re.

Even in the face of Covid-19, the resilience of the insurance-linked securities (ILS) market has been impressive, but moving forward, the entire risk transfer industry needs to be more attentive to emerging complex risks, says Benny Chey, Assistant Managing Director (Development and International), Monetary Authority of Singapore (MAS).

The alternative, or third-party reinsurance capital market, has permanently altered the structure of reinsurers and will continue to do so moving forward, according to Dr. Morton Lane, President, Lane Financial LLC, and Director, The University of Illinois in Urbana-Champaign.

The participation of the capital markets in financing the world’s most pressing risks is an important source of capacity and investors could support up to $2 billion of capacity to back pandemic catastrophe bonds, Hannover Re CEO Jean-Jacques Henchoz explained in a recent interview.

Issuance of new catastrophe bonds continued apace through early July, helping total cat bond and related ILS issuance reach $9.6 billion as of this time, according to Artemis’ Deal Directory data. While the demand from investors for higher-returns is increasingly evident, as both spreads and multiples-at-market accelerated over recent weeks.

Catastrophe bond issuance in the first-half of 2020 has been one of the bright spots in the insurance-linked securities (ILS) and alternative reinsurance capital market, as issuance was buoyed by the assets robust performance through the Covid-19 pandemic.

Twelve Capital, the Zurich headquartered insurance and reinsurance linked investment fund manager, is to expand its offering to investors in Australia and New Zealand to include its UCITS catastrophe bond fund, which is a strategy the manager has been successfully growing recently.

Catastrophe bonds are likely to become an increasingly “mainstream” component of institutional investor portfolios, as the asset class comes under increasing attention having proved its value again during the volatility driven by the pandemic, according to Brett Houghton, Managing Director at Fermat Capital Management.