Collateral news

The growth of the insurance linked investment asset class and issuance of insurance-linked securities and catastrophe bonds has given MEAG, the asset manager of reinsurer Munich Re and its insurance subsidiary Ergo, a boost.

Recently, two outstanding catastrophe bonds have seen impairments to the value of the collateral assets held in trust, which would eventually be used for loss payments or be returned to the cat bonds investors, putting investors at risk of a small loss of principal.

Collateral arrangements in catastrophe bond deals, not a subject we touch on particularly often, but something worth revisiting now that the long forecast death of the total return swap as collateral solution is almost upon us. When we last covered the total return swaps demise back in December 2011, it accounted for approximately 12% of […]

Wells Fargo & Company, the massive financial services group headquartered in the U.S., have announced that they are bringing their successful range of insurance trust products to the UK and EU. To date these insurance trust products have only been available in the U.S. where they are used in place of letters of credit and […]

Here’s an interesting press release from Karson Management, a firm established by the team at RISConsulting Group and led by Derrell Hendrix a veteran of the insurance-linked security and alternative risk financing/transfer sectors. The press release is regarding Karson Collateral, a provider of solvency eligible collateral for risk transfer and credit enhancement applications. Their K-Note […]

The 2007 Blue Fin Ltd. catastrophe bond which Allianz sponsored to secure a parametric source of European windstorm coverage has had an amendment made to the investment guidelines for the underlying collateral invested in one of the tranches of notes of the transaction. The cat bond is due to be redeemed in April 2012 and […]

Here’s an interesting graph which shows how rapidly the catastrophe bond market has moved from one which was dominated by transactions with collateral structured as a total return swap to one predominantly using Treasury money market funds. Swiss Re shared this graph during their insurance-linked securities media event last week and it shows how the […]

One of the interesting features of Munich Re’s Queen Street II Capital Ltd. catastrophe bond transaction is the collateral arrangements. The Queen Street II deal is still marketing at the moment but they have already established a fund to manage the investment collateral that the transaction will utilise.

Ever since the collapse of Lehman Brothers the tangled web of connections made through re/insurance linked deals with the firm have gradually unravelled to expose the massive influence and impact the companies failure had. A number of catastrophe bonds were impacted by Lehman’s collapse but the impact to reinsurers has spread beyond the cat bond […]

Standard & Poor’s has issued a report which reiterates that one of the key exposures in a securitization transaction (that includes insurance-linked securitization through catastrophe bonds) is counterparty risk. The risk of a counterparty being unable to meet its obligations within a transaction is central to S&P’s analysis of creditworthiness.