Catastrophe bonds and insurance-linked securities news

For sovereign governments, having a source of disaster risk financing and insurance provided by catastrophe bonds can help the government to borrow more on the capital markets, improve its standing with debtors and ultimately provide welfare gains to the population, according to a study.

South Korean pension fund manager the Public Officials Benefit Association (POBA), which manages for government workers pensions and has over US$7 billion in assets under its control, is reported to be planning to double its allocation to insurance-linked securities (ILS).

Insurance-linked securities (ILS) and catastrophe bond issuance diversification was evident throughout 2016, a year that saw the percentage of U.S. wind issuance reduce substantially from the previous year, according to Munich Re.

The recovery and payout made under the triggered Gator Re Ltd. catastrophe bond has been pegged at $29.5 million by the parent company of sponsoring insurer American Strategic Insurance Corp., an increase on its earlier expectations.

The influence of the insurance-linked securities (ILS) market and capital market reinsurance capacity on risk transfer market development is set to increase, according to speakers and attendees at Artemis’ first conference in New York recently.

The secondary market for trading in insurance-linked securities (ILS) and catastrophe bonds got off to a relatively active start in January 2017, but appetite remains strong and the demand overhang persists, according to market participants.

By the end of 2016, ILS and alternative reinsurance capital rose to a record estimated $78 billion, but this growing pool of capital needs to find opportunities to be put to work in insurance and reinsurance risks and one area of opportunity could be in providing pandemic coverage.

Insurance-linked securities (ILS) and catastrophe bond investors will be able to take advantage of a robust primary and secondary market in 2017, driven by the expectation of an active start to the year, says Aon Securities.

The Cincinnati Insurance Companies has significantly increased the size of its catastrophe bond and collateralised reinsurance protection with the successful issuance of a privately placed $180 million Skyline Re Ltd. (Series 2017-1) issuance with the help of Jardine Lloyd Thompson Capital Markets (JLTCM).

Another private catastrophe bond has been issued through the platform owned by insurance, reinsurance and capital markets broker and advisory Willis Towers Watson, a $63 million Resilience Re Ltd. (Series 1711A) transaction.