Collateralized reinsurance news

Adverse weather events consisting of hail, heavy rain, snow and intense windstorms such as Niklas devastated parts of Europe during March, causing expected economic and insured losses in the billions, according to Aon Benfield’s Impact Forecasting unit.

The insurance-linked securities (ILS) market is expected to continue to diversify itself away from more traditional catastrophe bonds, with continued growth of collateralised reinsurance expected and a gradual push into new perils and emerging markets.

The structurally lower cost of reinsurance capital presents an opportunity to property & casualty insurers, as innovations in structures and business models prompt a rethink of insurers risk profiles and their role in the value chain, according to analysts at Credit Suisse.

As the relentless pace of rate reductions continues across the global reinsurance market, while macro conditions and the inflows of alternative reinsurance capital reshape the reinsurance landscape, ILS funds can no longer be thought of as immune to these challenges.

The alternative reinsurance capital growth rate experienced in 2014 suggests that the insurance-linked securities (ILS), collateralized reinsurance and catastrophe bond space will hit $150 billion of capital by 2018, according to Aon Benfield.

Risk modelling firm AIR Worldwide estimates that the insurance industry loss from recent European windstorm (or extratropical cyclone) Niklas will range between €1 billion to €1.9 billion.

PERILS AG, Zurich based provider of industry-wide European catastrophe exposure, industry loss data and indices, will investigate the two recent European windstorms that impacted a number of European markets, Niklas and Mike.

Damage from wind storm Niklas, which struck northern European countries, particularly Germany, over the last day or so is not expected to amount to insurance or reinsurance industry losses that would come near troubling catastrophe bonds.

The reinsurance pricing trend has continued at the April renewals, with loss free accounts largely down in terms of pricing, and terms and conditions seen to be continuing to broaden, according to insurance and reinsurance broker Willis Group.

This year has seen a dearth of reported tornado events across the United States. Currently the run-rate for tornado reports is significantly below average and in fact less than half the 25th percentile and not far off the minimum ever seen by this time in March.