Catastrophe bonds and insurance-linked securities news

In a recent interview with Artemis, Christian Bruns, Hilary Paul, Pascal Koller, and Michael Stahel, LGT ILS Partners Portfolio Managers, noted an expectation for continued ILS sector growth in the coming months as market dynamics suggest additional interest in the space is likely.

Aetna’s latest and eighth medical benefit claims insurance-linked security (ILS) transaction, Vitality Re VIII Ltd. (Series 2017-1), has now been priced at the low end of coupon guidance, once again reflecting investor demand for these very remote health insurance related risks.

Catastrophe bond issuance during 2016 was dominated by aggregate coverage, a trend that has continued into 2017, and for the first time in the market’s history more of the outstanding market features aggregate coverage than per-occurrence, according to the Artemis Deal Directory.

The terrorism protection gap is now larger than ever and expanding all the time, underlining the need for innovative and effective solutions, with the insurance-linked securities (ILS) space a logical evolution, says Pool Re Chief Executive Officer (CEO), Julian Enoizi.

Welcome to the second Artemis ILS Bermuda Executive Roundtable, in which our participants explore a variety of challenges and opportunities for the sector as it continues down its impressive growth path in Bermuda, and beyond.

Insurance-linked securities (ILS) and catastrophe bond investors displayed pricing discipline in 2016, according to global reinsurance firm Munich Re, as risk spreads across the year remained stable, while the outstanding market reached a new high.

The Fibonacci Reinsurance Ltd. special purpose insurance vehicle helps reinsurer RenaissanceRe source risks efficiently for its third-party investors, as well as for its Medici cat bond fund, in a sidecar style structure that can provide bond-like investments.

The total return of the catastrophe bond market in 2016 came in more than 2.5% higher than 2015, with brokers and market indices typically reporting a 6% to 7% cat bond total return in 2016, compared to as low as 4% in 2015 depending on which bonds they included in their data.

The “ongoing strength and viability” of the catastrophe bond market and insurance-linked securities (ILS) has been evident in recent transactions from major ceding insurers, according to Kroll Bond Rating Agency (KBRA).

Following a wave of verticalization in 2016 the insurance-linked securities (ILS) space in the coming months will be defined by horizontalization, being the expansion of the ILS product offering, say Rick Miller and Michael Popkin, Co-heads of ILS at Jardine Lloyd Thompson Capital Markets (JLTCM).