Catastrophe bonds and insurance-linked securities news

The California Earthquake Authority (CEA) is pleased that ILS investors helped it to lock in a large slice of reinsurance protection at attractive pricing with its just completed $500 million Ursa Re Ltd. (Series 2016-1) catastrophe bond and may explore sponsoring additional cat bonds in 2017, its CEO told Artemis.

Insurance-linked securities (ILS) business is seen as a priority in a post-Brexit Britain by the new UK Government cabinet, and the new regulatory regime will be in place in the first-half of 2017, according to government speakers at an event in London this morning.

An amendment to Malta’s laws that extends a value added tax (VAT) exemption to include authorised reinsurance special purpose vehicles (RSPV’s) set up in Malta will help to ensure the islands insurance-linked securities (ILS) framework is as attractive as possible to potential registrants of such vehicles.

The outstanding catastrophe bond market has reached and passed $26 billion in size again, the first time since early April 2016, as the completion of the CEA’s $500m Ursa Re Ltd. (Series 2016-1) cat bond and American Strategic Insurance Group’s $200m Bonanza Re Ltd. (Series 2016-1).

Natural disasters, such as weather and geophysical catastrophe events, have been the direct cause of sovereign rating defaults in the past, but risk transfer, insurance and reinsurance can all help to support sovereign credit worthiness, with catastrophe bonds a tool available to help countries manage disaster risk.

A quarter of insurance and reinsurance companies say that they will use the capital markets to an increasing degree in 2017, according to data from a survey of 107 re/insurance professionals undertaken by Guy Carpenter.

It’s been reported that a number of countries in South America are looking to sponsor a catastrophe bond to protect against earthquake risks, with the help of reinsurance giant Swiss Re.

American Strategic Insurance Group’s second catastrophe bond issuance, the currently in the market $200 million Bonanza Re Ltd. (Series 2016-1), has now been priced at the low-end of the already reduced guidance, once again reflecting the strong appetite investors have for new cat bond issues.

The UK’s recent announcement on regulations for the development of an insurance-linked securities (ILS) market in the UK, should promote the creation of new re/insurance solutions, and could also be a catalyst for growth for both the London market and the broader ILS space, according to Ben Reid, Ernst & Young LLP (EY).

The sophisticated insurance-linked securities (ILS) investor base continues to fuel demand for insurance and reinsurance-linked exposures, and the persistent flow of third-party capital is bringing the traditional and alternative space closer together, according to ILS and reinsurance industry leaders.