Catastrophe bonds and insurance-linked securities news

Providing a useful indicator of the appetite of insurance-linked securities (ILS) and catastrophe bond investors, the €90 million Hexagon Reinsurance DAC (Series 2017-1) catastrophe bond issuance, sponsored by French mutual insurance society Covéa Group, has seen its pricing drop to below the initial guidance range.

The California Earthquake Authority (CEA), the not-for-profit residential earthquake insurance provider in the state, has reached a new milestone as it now insures more than 1 million homes across California, growth that has been assisted by the use of traditional reinsurance and risk transfer from the capital markets.

Bermudian reinsurance group Validus Holdings is sponsoring its first full catastrophe bond issuance with the launch to the ILS market of a $325 million Tailwind Re Ltd. (Series 2017-1) transaction, as it seeks to add more capital markets backed retrocession to its coverage.

The insurance-linked securities (ILS) fund market recorded an average return of 0.35% in October 2017, according to the Eurekahedge ILS Advisers Index, however the difference in performance was stark as the California wildfires drove 10 ILS funds fell to a negative month.

The $375 million Caelus Re V Ltd. (Series 2017-1) catastrophe bond, which was sponsored by U.S. primary insurer Nationwide Mutual Insurance Company in May and only came on-risk in June, looks set to face a loss as aggregated natural catastrophe claims have almost eaten through the riskiest tranche of notes.

A wildfire that has broken out in Ventura County, California in the last day could add as much as $2 billion to the insured loss tally from wildfires in the region, according to KBW’s analysts, which would exacerbate the hit from California wildfires to insurance, reinsurance and even ILS capital.

Special purpose insurance (SPI) vehicles domiciled in Bermuda remained largely focused on ILS and collateralized reinsurance transactions transferring risks emanating from the United States and from property lines of business, according to data from the regulator.

A number of insurance-linked securities (ILS) and reinsurance or retrocessional linked investment funds have fallen to a negative return in October 2017, the third month in succession for some strategies following the impacts of recent hurricanes and other catastrophe loss events.

Solidum Partners AG, the Swiss based catastrophe bond and ILS investment fund manager, has successfully completed the first ILS secondary trade on a blockchain, after a new investor member joined its private ILSBlockchain and entered into the transaction with one of Solidum’s funds.

Specialist Lloyd’s and Bermuda insurance and reinsurance company Neon Underwriting has become the first to make an official application to undertake an insurance-linked securities (ILS) transaction in the UK, according to a report.