Reinsurance linked investment

Having shown a divergence in manager strategies as NAVs moved in different directions at times and by different amounts as hurricane Milton approached, the US mutual investment funds that allocate to catastrophe bonds and other insurance-linked securities (ILS) diverged again at pricing on Friday, but have since stabilised having incorporated post-landfall net asset value adjustments.

Catastrophe bond fund manager Icosa Investments has highlighted current uncertainty over the level of losses the market may face from hurricane Milton, but notes that while some principal losses seem likely there remains a high level of uncertainty over certain structures, especially aggregate cat bonds that have much of their risk periods left to run.

Artemis has partnered with Artex Capital Solutions to host a live webinar on November 21st 2024, in which our industry expert speakers will explore the use of alternative capital sources by originators of insurance risk, such as managing general agents (MGA’s).

A very strong September return across the group of UCITS catastrophe bond fund’s tracked by the Plenum CAT Bond UCITS Fund Indices has taken the average return for the year to October 4th to an impressive 10.6%, although hurricane Milton will dent this slightly once the storm is accounted for.

The insurance industry loss from hurricane Milton in the US from wind, storm surge, and inland flooding has been estimated at close to $36 billion by Karen Clark & Company (KCC), although this excludes insured damage to boats, offshore properties, and losses to the National Flood Insurance Program (NFIP).

Analysis from Milliman concludes that hurricane Milton will end up a relatively minor catastrophe loss event for the insurance-linked securities (ILS) market, based on an estimate of insurance market losses in the $20 billion to $40 billion range.

The target allocation range has been increased for a Munich Re sidecar investment that features in the insurance-linked securities (ILS) portfolio managed by PGGM, the Dutch pension fund investment manager, on behalf of its end-client the Dutch pension PFZW.

Moody’s RMS Event Response has estimated that the total U.S. private market insured losses from the recent Hurricanes Helene and Milton will likely range between $35 billion and $55 billion.

According to analysis by Morningstar DBRS, the total private and public insurance market loss from hurricane Milton is expected to fall in the upper-half of a $30 billion to $60 billion range, with flood insurance losses to the NFIP expected to be up to $10 billion of the total.

Speaking with Artemis in a recent video interview, William Ho, the CEO of MS Amlin Asia Pacific, discussed the innovative Phoenix sidecar series of deals and explained that these challenged the norm of what is typically seen in insurance-linked securities (ILS) and the product has delivered for its investors.