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Original Risk: A Society for Change Agents

Modest wildfire impact possible for Pioneer ILS Interval Fund


The Amundi Pioneer managed interval-style mutual insurance-linked securities (ILS) fund, the Pioneer ILS Interval Fund, is expected to face a “modest” impact from the ongoing California wildfire outbreak.

Asset management giant Amundi Pioneer Investment Management manages a growing U.S. mutual insurance-linked securities and reinsurance linked investment fund which has broad property catastrophe reinsurance and retrocession exposure, hence will pick up some losses from the current California wildfire outbreaks.

As we explained earlier today, the wildfires have now destroyed some 15,489 structures across residential, commercial and so-called minor property structures and the latest estimates suggest an industry loss for insurance, reinsurance and ILS interests that could rise as high as $13 billion.

As a result, the expectations for impacts to ILS fund valuations are rising along with the industry losses, as the higher that figure goes the more of the loss is likely to reach reinsurance contracts and so eat into certain ILS fund positions.

Amundi Pioneer allocates capital to a full-range of ILS instruments, from catastrophe bonds, to industry loss warrants (ILW’s), collateralised reinsurance contracts, quota shares and sidecars.

As a result it is to be expected that the fund has some exposure to the California fires outbreak, with some losses perhaps likely across the spectrum of ILS assets the Pioneer ILS Interval Fund invests in.

The fund does have a $2 million position in the marked-down Cal Phoenix Re catastrophe bond, which could become a total loss if electrical utility PG&E’s infrastructure is found liable to have caused the Camp wildfire.

But most of the exposure for ILS funds like Amundi Pioneer’s is likely to come from private ILS transactions, such as collateralised reinsurance and quota share arrangements.

The investment manager said that it expects the net asset value (NAV) impact to the Pioneer ILS Interval Fund to be “modest.”

Also read:

Cat bond funds take NAV hit on wildfire cat bond write-down.

RMS puts Camp & Woolsey wildfire losses at up to $13 billion.

California wildfire losses rising, destruction nears 15,500 structures.

PG&E’s wildfire cat bond marked down for loss, traded at distressed price.

USAA cat bond & private ILS also at risk of wildfire losses: Twelve Capital.

PG&E sued over Camp wildfire, putting Cal Phoenix Re cat bond in the frame.

Wildfires could cost insurers $5bn to $10bn: Credit Suisse analysts.

Wildfires to drive up to $6bn industry insured loss – Moody’s.

Wildfire losses to hit record in 2018, pricing needs to change: A.M. Best.

Stone Ridge & CATCo fund prices dented by California wildfire threat.

Cat bond price volatility & discounts expected from wildfires: Plenum.

California wildfire most destructive ever, multi-billion losses expected.

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