Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Secondary cat bond market trading muted in December


Activity in the secondary catastrophe bond market was muted in December as many of the investors involved in the insurance-linked securities space turned their focus to collateralized reinsurance opportunities and the January renewals, says Plenum Investments, a Zurich based investment manager with a focus on the ILS asset class.

This change of focus for many of the larger investors in the space, who seek out direct collateralized and retrocessional reinsurance opportunities, means that the secondary market tends to be quieter around the major reinsurance renewal seasons.

European windstorm exposed bonds finished the month largely flat while some U.S. hurricane exposed cat bonds saw their spreads widening. Heightened issuance activity in the primary cat bond market along with slightly firmer prices in the reinsurance market combined with the seasonal price adjustments causes some pressure to be exerted on these bonds.

Plenum make some interesting comments on the recent spate of European windstorms. They see the current positive North Atlantic Oscillation (NAO) index as the main reason for this sudden cluster of northern European storms. This affected cat bonds in the middle of December when European windstorm Joachim came along and pushed down prices on European wind exposed cat bonds. The decline in prices were partially recovered by the end of the month causing Plenum to experience mostly flat performance across their portfolio. While these European storms cause some price pressure, Plenum say that they expect a general price increase on European wind positions as we move into January and come towards the end of the European windstorm season.

Artemis Live - ILS and reinsurance video interviews and podcastView all of our Artemis Live video interviews and subscribe to our podcast.

All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.

Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.

Print Friendly, PDF & Email

Artemis Newsletters and Email Alerts

Receive a regular weekly email newsletter update containing all the top news stories, deals and event information

  • This field is for validation purposes and should be left unchanged.

Receive alert notifications by email for every article from Artemis as it gets published.