ILS funds news, insurance linked securities or ILS fund news

It’s clear that after the series of heavy catastrophe losses that have struck the reinsurance and insurance-linked securities (ILS) industry since the middle of 2017, some ILS funds are likely to find raising capital more difficult after losses until they have proven their ability to make returns over-time (again).

A number of the world’s leading reinsurance firms are aiming to underwrite more retrocession at the upcoming January 2019 renewal season, as they view the retro market as an opportunity, given the impact trapped collateral may have on the availability of retro capacity at 1/1.

U.S. primary insurance giant Chubb has provided an estimate of its expected losses after reinsurance from the recent California wildfires and has also updated on its expected losses from hurricane Michael.

There is the potential for the 2019 reinsurance renewals to hold a “surprise to the upside,” according to ILS investment manager Twelve Capital, who suggests that rates may be better than the market currently anticipates after the major losses of recent months.

While everyone had originally said that 2017’s catastrophe losses were providing the first real test of insurance-linked securities (ILS) investors and structures, according to Dirk Lohmann, Chairman and CEO of Secquaero Advisors Ltd., it is actually 2018 that is the real test for the ILS market.

Increased use of quota shares as a way of ceding catastrophe losses to sources of reinsurance and retrocession led the way in Bermuda in 2017, as re/insurers domiciled in the marketplace ceded more of their losses last year.

Last weeks announcement of a major cyber hack attack and resulting data breach of one of the Marriott hotel chain’s reservation systems is expected to lead to a significant cyber insurance and possibly reinsurance market loss, leading Property Claim Services (PCS) to designate the event.

The Woolsey wildfire in southern California is estimated to have caused at least a $2.5 billion insurance and reinsurance industry loss by catastrophe risk modeller AIR Worldwide.

Trading of catastrophe bonds in the secondary market has increased in the last fortnight as some ILS fund holders free up capital in advance of the approaching reinsurance renewals, so the benefits of the liquidity within these the fully securitized instruments becomes evident again.

Many insurance-linked securities (ILS) funds have reported negative returns for the month of October 2018, as they take losses from hurricane Michael and also suffer after loss estimates increased for typhoons Jebi and Trami, driving the average ILS fund return to -0.81% for the month.