Insurance Linked Investments

Global insurance and reinsurance firm Hiscox today announced that Mike Krefta is to take over as Chief Executive Officer (CEO) of Hiscox Bermuda, Hiscox Re and insurance-linked securities (ILS), replacing Jeremy Pinchin.

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.

The investment returns of the two main hedge fund reinsurance firms, being Greenlight Re and Third Point Re, reveal a reversal of the negative trend witnessed throughout last year with both firms’ year-to-date figures showing an investment gain, despite differing performance so far in Q4 2016.

The range of fully collateralised insurance-linked securities (ILS) mechanisms remain largely untested in the face of a large loss-event, and the complexity of extreme events suggests that potential tensions within the marketplace could emerge after an event, according to industry leaders.

Insurance and reinsurance companies are in the main, not sufficiently equipped to underwrite and model cyber exposure and lack the required capacity to address the rising threat of an aggregation of losses from ‘silent’ cyber attacks, according to Rick Welsh of Sciemus.

The recent magnitude 7.8 earthquake that struck the Kaikoura area of New Zealand could result in a cost to the economy of up to NZ$8 billion, with insurance and reinsurance potentially paying as much as NZ$5 billion (almost US$3.6 billion) of the loss, according to the country’s Reserve Bank.

As the insurance-linked securities (ILS) space continues to evolve, increasingly becoming an integral part of the reinsurance and broader risk transfer landscape, industry experts have underlined the benefits of establishing a set of standard, and comprehensive information and reporting guidelines to assist investors in the space.

During 2015 Bermuda domiciled insurers utilised a range of reinsurance solutions to insulate themselves from catastrophe events, with the level of reinsurance dependent on the peril, according to a new report from the Bermuda Monetary Authority (BMA).

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.