Collateralized reinsurance news

The main concern cited by reinsurance industry participants in response to a recent survey is current market conditions. The concern centres on soft reinsurance market conditions, created by excess capacity and the influx of ‘new capital’.

Sophisticated buyers of collateralized reinsurance protection, from insurance-linked securities (ILS) managers, funds, sidecars and other structures, are becoming increasingly discerning, as the product matures and buyers examine ILS offerings more closely, according to Willis Re.

The UK’s city and financial regulator, the Prudential Regulation Authority unit of the Bank of England, has launched a series of robust stress tests for general insurers which could produce telling and interesting results for reinsurance, ILS and catastrophe bonds.

A firmer insurance-linked securities (ILS) market is ahead as discipline helps to slow price declines, while at the same time innovation in the ILS and catastrophe bond market continues apace, according to Twelve Capital.

The New Zealand Earthquake Commission (EQC), a state-backed provider of earthquake insurance coverage, is seeking greater flexibility in its use of reinsurance, including the ability to issue catastrophe bonds as part of its risk transfer.

Alternative reinsurance capital, so third-party investor funding allocated to catastrophe bonds, collateralized reinsurance, sidecars and other insurance-linked securities (ILS), grew by more than 3% in the first-quarter to $66 billion, outpacing total reinsurance capital growth.

Discipline in the insurance-linked securities (ILS) and collateralized reinsurance market at the recent June and July 1st renewals has helped reinsurance rates begin to stabilise, as supply and demand equalises in peak property catastrophe zones, according to Willis Re.

A new Australia and New Zealand focused insurer named Youi has tapped the ILS market for protection, thanks to the transformation of a collateralized reinsurance contract into note form, enabling Youi’s risk to be broadly syndicated to ILS investors.

The scheduled second estimate for insurance industry losses from European windstorms Mike & Niklas has released this morning at €895m by PERILS AG, an increase of 5% since the first loss estimate from back in May.

For German reinsurance firm Hannover Re acting as a service provider in the ILS industry, through fronting and transformation of risks, is increasingly becoming a key growth area bringing in incremental revenues and helping the reinsurer to build new relationships.