Insurance Linked Investments

Echoing what we’ve been reporting for more than two year’s now, higher attachment points for reinsurance and retrocession contracts are the real hard market story analysts at Jefferies suggest, when it comes to delivering returns to stakeholders.

Tradesman Program Managers, a specialist managing general agent (MGA) wholly owned by Roosevelt Road Capital Partners, has secured replacement reinsurance cover for the section of its tower that had been provided through a Clear Blue fronted arrangement with insurtech Vesttoo.

White Mountains Insurance Group has reported that the value of its investments into insurance-linked securities (ILS) funds has risen by 211%, as additional allocations to Elementum Advisors, the ILS fund manager it has an ownership stake in, lifted the total considerably.

In a new statement, a spokesperson from under-fire insurtech Vesttoo has said that know your customer (KYC) was conducted on all parties internally, as well as by external organisations that were involved in the collateralized reinsurance deals it facilitated.

With seasonality set to boost already high returns for insurance-linked securities (ILS), Chin Liu of Amundi US Investment Management is expecting “solid returns” and sees a positive outlook for both catastrophe bonds and other ILS strategies.

Across the market, carriers are receiving requests for replacement capacity to support billions in risk, in the wake of the Vesttoo-linked collateral fraud scandal, with some set to benefit from an unexpected opportunity to deploy more limit at a time of year when books are often relatively static, Artemis has learned.

The catastrophe bond market is seen as a bright spot when it comes to reinsurance capital inflows, but overall the market’s capital base remains pressured, although property catastrophe risks appear to have found a pricing equilibrium, Aon’s senior leadership said recently.

Speaking yesterday, Mac Armstrong, the CEO of Palomar Insurance Holdings, the speciality California-headquartered insurer that offers largely catastrophe exposed property products, disclosed exposure via a single counterparty to the Vesttoo-linked collateral issues, but said this is “immaterial” and could actually constitute an opportunity for his firm.

Higher assets under management and improved returns in the insurance-linked securities (ILS) funds and sidecar structures managed by Swiss Re’s Alternative Capital Partners (ACP) division have driven a significant increase in fee income and commissions earned by the reinsurer in the first-half of 2023.

Root Insurance, the auto lines focused insurtech that also bundles coverage with renters and homeowners products, has exposure to a reinsurance arrangement with links to Vesttoo, but the company’s CFO said it would feel comfortable commuting that and retaining the risk, if it needed to.