Industry loss warranty news

With the key January reinsurance renewals having been challenging and characterised by reduced capacity and higher pricing, the focus can often turn to buying hedges such as industry-loss warranties (ILW’s), but a new study highlights some issues investors should be aware of.

K2 Advisors, the hedge fund focused investment management unit of Franklin Templeton, has become even more constructive on the insurance-linked securities (ILS) asset class, seeing near record high catastrophe bond spreads, as well as improved conditions in private ILS, retrocession and industry loss warranties (ILW’s).

As the catastrophe bond market continues to deal with the effects of the 2022 Atlantic hurricane season, Tom Johansmeyer, Head of PCS, Verisk Insurance Solutions, expects demand for industry loss triggers to persist for some time.

The January 2023 treaty reinsurance renewals are running far behind their usual schedule, with only around 5% of the treaty market reportedly having cleared so far, and rate increase indications seemingly rising, analysts at KBW found after a trip to meet with re/insurance executives in Bermuda.

For industry loss warranty (ILW) markets opportunities are plentiful heading into 2023, but it’s up to the industry to take advantage of it as more concepts are expected to continue to gain traction, according to Tom Johansmeyer, Head of PCS, Verisk Insurance Solutions.

In the wake of hurricane Ian, the industry loss warranty (ILW) market faces its share of losses, which, alongside broader issues impacting reinsurance and retrocession capital availability, means ILW rates-on-line are now heading for all time highs, according to our sources.

Industry loss warranty (ILW) pricing surged through the first-half of 2022, thanks to rising demand for ILW protection amid a constrained market for reinsurance and retrocession capacity, according to the CEO of the City National Rochdale Select Strategies Fund.

Growth of the insurance-linked securities (ILS) market is not as assured as it might seem, with a number of potential threats to it. But Tom Johansmeyer, Head of PCS at Verisk, believes there is plenty of opportunity for ILS expansion, with specialty retrocession one clear area for ILS market growth.

We’ve developed an industry-loss warranty (ILW) pricing data set from information we’ve gathered over the years, as well as recent input from our market sources that helped validate this new Artemis data service.

The retrocessional reinsurance market is expected to face still-limited capacity at the key January 2023 renewal season, according to Guy Carpenter’s CEO of Global Specialties, James Boyce.