Catastrophe bond news

Today we publish our latest quarterly report on the catastrophe bond and insurance-linked securities (ILS) market. The report titled ‘Q4 2014 Cat Bond & ILS Market Report – A busy finish to a record year for ILS‘ also includes a brief review of the record year of issuance.

2014 has been an exciting year to be an observer on the reinsurance market and its deepening convergence with the global capital markets and institutional financing. As 2015 begins its worth looking back at what Artemis’ readers thought were key moments from last year.

Reinsurance broker Willis Re said that change is the only sustainable course of action for many reinsurers, as competition at renewals pushes rates on catastrophe business down by 10%, but some evidence of a price floor is emerging the broker said.

Rating agency Standard & Poor’s has now affirmed its rating on the MultiCat Mexico Ltd. (Series 2012-1) Class C catastrophe bond notes and removed them from CreditWatch as hurricane Odile was not a triggering event.

As of the 31st October 2014 the total net assets of New York based Stone Ridge Asset Management’s three insurance and reinsurance-linked investment funds had reached $2.124 billion, up by approximately 5% since the end of July.

Signs that the catastrophe bond pricing environment has become more stable are becoming increasingly apparent as the end of 2014 approaches and the pace of price declines continues to slow, according to a report by ratings agency Moody’s.

The U.S. National Association of Insurance Commissioners has received a proposal to change the capital treatment of catastrophe bonds for life insurers investing in them, which it believes could open the floodgates for a wave of new capital to enter the ILS sector.

German reinsurance firm Hannover Re has facilitated another private catastrophe bond or ILS transaction, LI Re (Series 2014-2), as the second private bond transformation and issuance under the LI Re segregated account of Kaith Re Ltd.

Florida primary insurer American Strategic Insurance’s Gator Re Ltd. catastrophe bond saw some trading activity earlier this month despite the threat of losses, but a recent thunderstorm and tornado system may produce additional qualifying losses.

The practice of successfully and accurately modeling casualty or liability catastrophe risks is something that continues to prove difficult for insurance and reinsurance firms, making them most likely a slow area of expansion for ILS and alternative capital.