Insurance Linked Investments

While loss creep, trapped collateral and the general ongoing impacts from prior year reinsurance related catastrophe losses continue to plague the insurance-linked securities (ILS) market, it’s important to remember that the asset class can still deliver significant value, in terms of investor returns.

The recent Capital One cyber hack attack and resulting significant data breach could lead to a significant cyber insurance and possibly reinsurance market loss, leading Property Claim Services (PCS) to designate the event.

Mortgage risk insurer MGIC has revealed that the removal of maximum coverage levels in certain states resulted in the partial termination and restructuring of its 2015 quota share reinsurance arrangement with an affiliate, which subsequently impacted its Q2 results.

The insurance-linked securities (ILS) market is slowly returning to normal, as loss creep affecting the sector has reduced substantially, according to Willis Re Securities.

Financial services insurance and reinsurance group Alleghany Corporation has reported a continuation of the rebound in income earned from its stake and investments in specialist insurance and reinsurance linked ILS asset manager Pillar Capital and its funds.

White Mountains Insurance Group has begun allocating capital to ILS funds under the management of Elementum Advisors, LLC, the insurance and reinsurance linked asset manager it had recently acquired a 30% stake in.

Global insurance and reinsurance group Allianz has been testing out the securitisation of cyber risks and there transfer to capital markets investors, but the firms CFO explained recently not to expect an explosion of such activity, as it is “not priority number one.”

Loss creep continued to affect the market for insurance-linked securities (ILS), catastrophe bonds and collateralized reinsurance funds in June 2019, denting the average performance to a below average 0.30% for the month.

Bermuda headquartered international specialty insurance and reinsurance firm Argo Group has continued to expand its use of third-party capital during the second-quarter of 2019.

Athene Holding Ltd., the life and retirement reinsurance firm that is majority owned by Apollo, has now taken the capital commitments raised for its new Athene Co-Invest Reinsurance Affiliate (ACRA) vehicle to nearly $1.5 billion.