Catastrophe bonds and insurance-linked securities news

Insurance and reinsurance broker Aon has reported its fourth-quarter 2019 earnings and has highlighted strong growth in catastrophe bond and capital market related activities as one of the key drivers of an impressive 17% organic revenue growth within its reinsurance broking unit.

The U.S. Federal Emergency Management Agency (FEMA) is back in the catastrophe bond market with a $300 million FloodSmart Re Ltd. (Series 2020-1), which will be its third transaction seeking flood reinsurance coverage from the capital market for its National Flood Insurance Program (NFIP).

Twelve Capital, the Zurich headquartered insurance and reinsurance linked investment fund manager, has continued to raise new capital for its UCITS catastrophe bond fund strategy, taking the total close to US $550 million.

Essent Guaranty has returned with its fourth mortgage insurance-linked securities (ILS) transaction and its first of 2020, as it seeks to expand on its capital markets backed sources of excess-of-loss mortgage reinsurance protection with a new $421.6 million Radnor Re 2020-1 Ltd. transaction.

The remaining $15 million of notes issued in a 2018 transaction by reinsurance firm RenaissanceRe’s insurance-linked securities (ILS) vehicle Fibonacci Re Ltd. have had their maturity date extended further, as further clarity on potential losses is seemingly sought.

As institutional investors look to asset classes that promote sustainable and responsible investing, increasingly, they are drawn to the environmental, social and governance (ESG) qualities of insurance-linked securities (ILS), according to Greg Wojciechowski, President and Chief Executive Officer (CEO) of the Bermuda Stock Exchange (BSX).

Reinsurance giant Swiss Re is back with a second catastrophe bond for 2020, seeking up to $275 million of retrocessional protection with a Matterhorn Re Ltd. (Series 2020-2) transaction that will cover it against certain losses from U.S. named storms and hurricanes, as well as extreme mortality exposures.

The worsening outbreak of a novel coronavirus in China has brought the World Bank’s pandemic catastrophe bond transaction back into focus and it turns out that China was seen as the most probable source of a coronavirus outbreak that could trigger the IBRD CAR 111-112 notes.

The latest catastrophe bond to be sponsored by Zenkyoren (the Japanese National Mutual Insurance Federation of Agricultural Cooperatives), one of the world’s largest reinsurance buyers, looks set to upsize by 33% to provide the insurer $200 million of protection, but pricing has been fixed at the top-end of guidance.

Issuance of the Stratosphere Re Ltd. (Series 2020-1) catastrophe bond has now been successfully completed without upsizing at $100 million but at the lowest end of pricing, offering an efficient source of tail-risk protection to the largest ILS fund manager in the market Nephila Capital.