Reinsurance News

Obsidian Insurance Holdings, Inc., a hybrid program insurance and fronting carrier holding company, has told us that any impact from the fall-out of collateral related issues at insurtech Vesttoo could only have “de minimus” impact to its business.

One of the trends coming out of the second-quarter is the elevated level of convective storm and severe weather losses affecting insurers across the United States, but at new and higher attachment levels very little reinsurance support is being seen, so far.

The Hanover Insurance Group is the latest to reveal a heavy catastrophe loss burden from recent convective storms and severe weather in the United States, but the carrier also said it has successfully renewed all its reinsurance at expiring terms for the coming year.

According to our sources, insurance-linked securities (ILS) fund managers are having continued success at closing down certain exposures to last year’s hurricane Ian, with a number of side pockets being finalised and trapped capital continuing to be freed.

Program fronting specialist Clear Blue Insurance Group has stated that while it does not expect a material impact to its ratings from the ramification of issues at Vesttoo, the company may seek out more reinsurance to protect its surplus and capital.

For reinsurance broker Guy Carpenter two areas of specific growth during the second-quarter of 2023 were the insurance-linked securities (ILS) market and global retrocession, with capital inflows seen to help activity increase, according to President and CEO Dean Klisura.

Arbol, a technology-led underwriter of parametric risk transfer, climate and weather insurance or reinsurance business, has reported now surpassing $1 billion of notional risk limit transferred, while 2023 premiums written are running at a record pace.

Natural disaster losses covered by the insurance and reinsurance industry reached an estimated $53 billion, according to broker Aon, which it notes was some 46% above the 21st-century average.

Hybrid fronting specialist MS Transverse has stated that Vesttoo only participates directly on one program with MS Transverse and that this business is fully collateralized with cash.

The insurance and reinsurance industry faces a potential crisis of confidence over some forms of collateral, as the fall-out from the Vesttoo fraudulent, or forged, letter of credit (LOC) claims spread, which might elevate the profile of the fully-collateralised model of reinsurance adopted by the insurance-linked securities (ILS) market.