All of our news and analysis on the retrocessional reinsurance marketplace.
Retrocession is effectively reinsurance for reinsurers, so a tertiary layer of risk transfer away from the original risk, if you consider primary, reinsurance and then retrocession.
As reinsurance is insurance for insurers, retrocessional, or retro, protection is reinsurance for reinsurers.
The retrocession reinsurance market has increasingly come to depend on the capital markets and insurance-linked securities (ILS).
As of mid-year 2022, global retrocession capacity has been estimated to be as high as $60bn, around $20bn of which is indemnity based and the rest in other formats.
The alternative capital markets and ILS funds, or investors, play a significant role in global retrocession, as too do instruments such as catastrophe bonds and industry-loss warranties (ILW).
A new proposal from Markel CATCo Investment Management and Markel Corporation seeks to speed the return of capital from the CATCo retrocessional reinsurance investment funds to investors, while avoiding any complications to the ongoing running-off from legal claims made.
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The retrocession market failed to harden as hoped for through 2021, with in some cases rapid and material declines in pricing seen, especially in industry loss warranty’s (ILWs’), according to Guy Carpenter’s Sebastian Cook.
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The upward trajectory of rates on line will continue at the January 1st 2022 reinsurance renewals, including European accounts hit by losses this year, according to Sven Althoff, executive board member at Hannover Re.
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There is a clear and ongoing ‘flight to quality’ where ILS funds are concerned, according to Dirk Lohmann, Chairman and Flavio Matter, Head of Origination, ILS, at Schroders Capital.
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While there have been challenges for ILS investors over recent years related to losses from so-called secondary perils and to aggregate structures, the market is expected to continue attracting capital, even to these more recently loss-affected areas, according to Tim Ronda of Aon’s Reinsurance Solutions.
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According to a survey undertaken by publisher Pensions & Investments, Markel owned insurance-linked securities (ILS) investment manager Nephila Capital is one of the most institutional hedge fund managers, based on the profile of its end-investors.
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Tremor Technologies, the insurtech with a technology-based programmatic insurance and reinsurance risk transfer marketplace, said today that it now counts 33 Lloyd’s of London syndicates among the risk capacity providers signed up to its platform.
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Catastrophe bonds sponsored by specialty insurance and reinsurance company Fidelis Insurance Holdings Limited have been marked down by as much as 10%, or slightly more, as industry loss expectations for hurricane Ida rise, while some of the other exposed cat bonds have also seen more price declines.
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The retrocessional reinsurance investment portfolio constructed by Markel’s CATCo Investment Management is continuing to develop more favourably than had originally been expected, with the firm reporting a reduction of claims in relation to catastrophe events from 2017.
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The collateralized reinsurance market is estimated to have grown to around US $50 billion by the end of the first-quarter of 2021, with capacity having increased slightly following a more challenging period, according to AM Best.
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