ILS funds news, insurance linked securities or ILS fund news

Reinsurance broker JLT Re reports that “selective firming” was seen in global property catastrophe reinsurance rates at the January 1st 2018 renewals, helping the firms Risk-Adjusted Global Property-Catastrophe Reinsurance Rate-On-Line Index to a 4.8% rise, the first increase since 2011/12.

The availability of risk capital has curtailed reinsurance renewal rate rises at the key January 1st 2018 contract signings, with global property catastrophe and risk programs only seeing average risk adjusted price rises of 0% to 7.5%, according to broker Willis Re.

The decoupling of reinsurance pricing and expected reinsurance losses is “a less-than-ideal business model” according to analysts at Keefe, Bruyette & Woods, who feel that price hikes tend to be a reaction to losses, rather than being commensurate with a changing view of risk.

Negative returns have continued for a number of insurance-linked securities (ILS) and reinsurance or retrocessional linked investment funds in November, as some reserve strengthening has been required for prior month catastrophe events and a few ILS funds have been hit by the California wildfires.

Global asset management firm, Baillie Gifford, is unlikely to significantly increase its allocation to the insurance-linked securities (ILS) space until spreads widen, according to Baillie Gifford’s David McIntyre, one of the managers of its Diversified Growth Fund.

Speed-to-market remains the main sticking point for the United Kingdom’s Risk Transformation Regulations 2017 and the Risk Transformation (Tax) Regulations 2017, which constitute the UK’s insurance-linked securities (ILS) regulatory regime, according to law firm Clyde & Co.

While the record levels of third-quarter catastrophe losses are expected to “crystalize a turning point” by the equity analysts at Morgan Stanley, the team believe that this any post-loss turn in rates will be more durable in primary insurance lines than in reinsurance or retrocession.

Severe thunderstorms that struck the Victoria and Melbourne region of Australia on December 19th, bringing strong winds, large hail and flash flooding, are estimated to have already resulted in over AU $105 million of claims, a figure that is expected to rise significantly.

Ratings agency Standard & Poor’s (S&P) has forecast that global reinsurance rates will rise by between 0% and 5% in 2018, with the potential for double-digit price increases in loss-affected lines, but notes that it needs to see more discipline from reinsurers as well.

Gryphon Group Holdings Limited, the insurtech start-up that hopes to launch disruptive insurance ventures into established sectors and that raised £180 million, including capital from ILS fund manager Leadenhall Capital Partners, has acquired Guardian Assurance Limited and will operate the protection business it is building under the Guardian brand.