Catastrophe bonds and insurance-linked securities news

Ratings agency A.M. Best has now released Best’s Insurance-Linked Securities & Structures Methodology (BILSM) after the termination of the public comment period. The publication of the new methodology contains “minor changes,” but that could impact the rating of at least one ILS transaction, says A.M. Best.

Floridian primary insurers have once again increased their use of catastrophe reinsurance for the 2016 hurricane season, as they took advantage of market forces to increase their 1-in-100 year hurricane coverage, as well as for second and subsequent events.

Collaboration between the Bermuda government and a range of local service providers has enabled the island to become a leading domicile for insurance-linked securities (ILS) business, according to the Bermuda Business Development Authority (BDA).

British Columbia (BC), the westernmost province in Canada, has identified a need to develop a fast-response insurance solution to protect vital infrastructure in the event of an earthquake, and has already started working with reinsurers.

The Swiss Re Global Cat Bond Total Return Index posted an annualised return of 5.77% for the first-half of 2016, up 1.56% on the annualised return recorded in H1 2015, and reflecting more stable pricing the cat bond coupon return component stayed in-line with the level witnessed in 2015.

Once again, July saw very strong demand for catastrophe bond investments with the secondary market feeling the effects of demand outstripping supply of new issuance, resulting in further price rises and an active cat bond secondary trading market.

The uncorrelated and diversifying benefits of investing in insurance-linked securities (ILS) continues to broaden the reach of the asset class, as registered investment advisers (RIA) become the latest to show increasing interest in the asset class, according to a recent article by Institutional Investor.

Specialist insurance linked securities (ILS) and reinsurance investments manager Securis Investment Partners has hired Raphael Rayees, previously at Aon Securities in London, to assist with managing its catastrophe bond portfolio.

The evolving insurance-linked securities (ILS) sector continues to present both challenges and opportunities for participants, with respondents to a recent ILS survey highlighting competition as a threat to sector growth.

Insurance technology, or insurtech, initiatives are being discussed at the highest levels of the world’s largest insurance and reinsurance firms, as they attempt to get to grips with what the disruptive efficiency of technology will mean for their businesses.