Catastrophe bonds and insurance-linked securities news

A number of insurance-linked securities (ILS) and reinsurance linked investment funds ended 2016 with some loss reserve adjustments in December, ending a year that saw a frequent number of events impact the ILS market. We take a look at some of the events that threatened ILS fund losses in 2016.

Health insurance company Aetna said that its successful eighth Vitality Re health insurance linked securitisation transaction, the $200 million Vitality Re VIII Ltd. (Series 2017-1), contributes to an enhanced capital position for the firm.

Bermuda saw a flurry of special purpose insurance (SPI) vehicle registrations in December, which took the total registered for catastrophe bond issuance and other collateralised reinsurance structures to seventeen for the full-year 2016.

Given the fact that reinsurance cession rates remain near record lows, thanks to the softened state of the market, it is time for re/insurers to re-examine reinsurance as a form of contingent capital, JLT Re suggests.

The frequency and severity of natural disasters is increasing across Canada and the government must collaborate with the private sector to develop innovative, and effective solutions, says Glenn McGillivray, Managing Director (MD) of the Institute for Catastrophic Loss Reduction (ICLR).

Insurance-linked securities (ILS) issuance throughout 2016 remained strong in a tough operating landscape. Total market capacity reached a high of $75 billion in 2016, driven by continued investor appetite for increased diversification of the asset class, according to WCMA.

Insurance-linked securities (ILS), pure catastrophe bond and reinsurance-linked investment funds have managed an average return of 5.18% for the full-year 2016, which is up almost a percent from 2015’s 4.24%.

International law firm Ashurst has provided some feedback and commentary on the UK government’s proposed insurance-linked securities (ILS) framework, highlighting potential areas HM Treasury and the Prudential Regulation Authority (PRA) should take into consideration to ensure a competitive regime.

Insurance-linked securities (ILS) and catastrophe bond issuance is expected to gather pace into 2017, as the market carries on from a positive end to 2016, and is expected to reinvest large quantities of capital from maturities, according to Aon Securities.

Pricing has been more stable in the market for private insurance-linked securities (ILS), such as collateralised reinsurance transactions, than in the liquid catastrophe bond market, according to portfolio managers at Pioneer.