Reinsurance linked investment

The use of third-party capital by reinsurance companies is expected to remain a key lever for the sector, as they seek to expand and take advantage of increasing demand for their coverage, S&P Global Ratings has said.

PGGM, the Dutch pension investment manager that is the largest single allocator to the insurance-linked securities (ILS) market on behalf of end-client pension PFZW, has issued a call for ILS fund managers to provide more data and transparency.

At the end of May, the overall yield of the catastrophe bond market had reached 13.54%, its highest level since September, with the driver of this being the spread widening seen in the market, as cat bond risk spreads rose by 13% in the last month alone.

Global reinsurance giant Swiss Re has called for an industry focus on the issue of loss creep after natural catastrophe events in Europe, saying it is an “industry-wide phenomenon”, that shows the need for more up-to-date insured values to be used and for better information flow along the market chain.

The effects of spread widening in the catastrophe bond market are now evident in the performance of the Eurekahedge ILS Advisers Index for April 2024, as private ILS funds outpaced cat bond strategies for the first time this year.

Recent “signs of hardening” in the catastrophe bond and insurance-linked securities (ILS) market have driven spreads back to their highest level in months, which investment manager Twelve Capital notes “highlight the prospects for potentially prolonged attractive spreads,” and makes for an interesting entry point to ILS for investors.

Aeolus Capital Management Ltd., the Bermuda based reinsurance and insurance-linked securities (ILS) investment fund manager, has announced a new research partnership with natural disaster focused risk analytics firm RED – Risk Engineering + Development, in which implications of earthquake sequences will be explored.

Icosa Investments AG, the Swiss catastrophe bond focused investment manager, has announced the hiring of Stefan Haring as its first Head of Investment Analytics & Technology and a new strategic partnership with Munich-based asset manager finccam investment GmbH.

Twelve Capital, a Zurich-headquartered insurance and reinsurance focused investment manager, has announced a key hire for its catastrophe bond team, with former Credit Suisse ILS employee Tanja Wrosch joining to head up portfolio management for cat bonds.

Tenax Capital, the London based hedge fund investment manager that operates a UCITS cat bond strategy, has analysed what it calls the “unusual” peak in volatility seen in recent weeks, which has resulted in the net risk margin gap widening between various perils.