With loss estimates for the Los Angeles, California wildfires having risen, there is now likely to be “considerable attachment erosion” for some aggregate catastrophe bonds that hold exposure to the wildfire peril, Florian Steiger, CEO of Icosa Investments AG has said.
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High-demand for catastrophe bond investments has compressed risk spreads somewhat, resulting in the overall yield of the catastrophe bond market falling back into single digits at 9.94% by the end of December 2024, according to the latest data from Plenum Investments.
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Overnight, more details on the scale of the devastation caused by the wildfires burning in the Los Angeles region of California have emerged, with officials saying 10,000 structures have been destroyed across the two main fires, while estimates of losses continue to rise.
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Munich Re estimates the insurance and reinsurance industry’s financial toll from natural catastrophe events in 2024 at US $140 billion, while economic losses were far higher at $320 billion.
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Losses from the wildfires burning around Los Angeles in California are likely to predominantly fall to primary insurance carriers and more junior reinsurance layers, specialist insurance-linked securities (ILS) manager Twelve Capital has said.
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Specialist manager of catastrophe bond and insurance-linked securities (ILS) funds Plenum Investments has said that it does not believe that the ongoing wildfire situation in Los Angeles will have a meaningful impact on the catastrophe bond market.
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Equity analysts from investment bank JP Morgan have now doubled their earlier loss estimate for still raging Los Angeles region of California wildfires, now suggesting it could even exceed $20 billion.
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TD Insurance, part of Canada’s TD Bank group, has now priced its debut MMIFS Re Ltd. (Series 2025-1) catastrophe bond deal, with the notes finalised to pay investors a risk spread at the bottom end of already reduced guidance, Artemis has learned.
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GeoVera Insurance Holdings, Ltd. is back in the catastrophe bond market to sponsor its third transaction, which looks set to be its largest yet as it seeks $275 million of earthquake reinsurance protection from a Veraison Re Ltd. (Series 2025-1) cat bond issuance, Artemis can report.
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Ark Insurance Holdings Limited, a property and casualty insurance and reinsurance subsidiary of the White Mountains Insurance Group, Ltd., has successfully sponsored a renewal of its collateralized reinsurance sidecar Outrigger Re Ltd. for the 2025 calendar year, but at a slightly smaller size than seen in 2024.
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Having recently secured $250 million of retrocessional reinsurance protection from its first catastrophe bond sponsorship since 2013, QBE executives have now said that the Bridge Street Re Ltd. (Series 2025-1) issuance is an “important enabler” and builds on the launch of its recent Bermudian balance-sheet entities.
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Global reinsurance firm Swiss Re is back in the catastrophe bond market seeking $150 million or more in North American earthquake and named storm retrocessional protection from capital market investors, through a Matterhorn Re Ltd. (Series 2025-1) transaction.
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More wildfires broke out in the Los Angeles area of California over night meaning the property damage has continued and early estimates from some of the insurance industry focused equity analyst teams suggest a potential industry loss in the $6 billion to as high as $13 billion range.
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According to the latest news reports and a statement by the local fire chief, more than 1,100 structures are said to have been destroyed by the wildfires that continue to burn out of control in the Los Angeles, California suburbs.
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