Catastrophe bonds and insurance-linked securities news

The Jardine Lloyd Thompson Capital Markets (JLTCM) insurance-linked securities (ILS) structuring and issuance team has successfully placed a second weather risk exposed catastrophe bond for sponsor Allianz Risk Transfer, in a $14.5 million Market Re Ltd. (Series 2017-2) transaction.

The Lloyd’s Corporation, an independent organisation and regulator that sits behind the Lloyd’s of London insurance and reinsurance market, has been looking at the United Kingdom’s new insurance-linked securities (ILS) regulatory regime and considering its potential uses for disaster risk transfer.

The succesful execution and placement of French mutual insurance society Covéa Group’s first catastrophe bond, the €90 million Hexagon Reinsurance DAC (Series 2017-1), demonstrates that it is possible to issue transactions covering lower attachment points for European perils.

The first full catastrophe bond issuance sponsored by Bermudian reinsurance group Validus Holdings is set to achieve efficient execution, as the marketed size of the deal has now been increased by 23% to $400 million, while the coupon price guidance has been reduced, falling to below the originally marketed ranges.

French mutual insurance society Covéa Group has successfully sponsored its first catastrophe bond, the €90 million Hexagon Reinsurance DAC (Series 2017-1) transaction and this morning hailed it as the first to be exposed to French windstorm risks on an indemnity and aggregate basis.

Florida’s Citizens Property Insurance Corporation is budgeting for a slightly harder reinsurance market in 2018, expecting to increase its risk transfer spend by approximately $7.3 million or 8%, but aiming to increase the amount of coverage it buys to $1.45 billion.

Insurance and reinsurance linked investment fund manager Twelve Capital highlights that 2017 is a very different year for aggregate catastrophe bonds, as wildfire risks which typically only contribute a small amount of any cat bonds expected loss could be the peril that tips a number of transaction into paying out.

The impact on global reinsurance pricing that alternative, or third-party capital has had during its recent and impressive growth could be declining, as traditional market players have become more comfortable with the influential segment of the risk transfer space, according to industry experts.

Reinsurance renewal rates are likely to trail initial market expectations in January 2018, as the anticipation amongst reinsurers of major price increases have declined somewhat since the third-quarter reporting season, according to analysts at Keefe, Bruyette & Woods.

When this year’s major hurricane losses struck the insurance-linked securities (ILS) market, the last thing on most investors minds was the relative performance of their investment managers. But now, with the picture of the eventual loss clearing, many ILS investors will for the first time be able to compare their ILS manager with others in […]