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).
Japanese domestic insurers have now paid out roughly US $9.2 billion in claims related to typhoon Faxai, typhoon Hagibis and the heavy rainfall event that closely followed these storms, which is an increase of 35% on figures released in December by the General Insurance Association of Japan (GIAJ).
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France headquartered global reinsurance company SCOR has returned to the capital markets to sponsor a new catastrophe bond, Atlas Capital Reinsurance 2020 DAC (Series 2020-1), in search of an expanded insurance-linked securities (ILS) backed source of retrocessional reinsurance protection.
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According to analysts, loss development from last year’s Japanese typhoon Hagibis is not following the same path as 2018’s Jebi, with the current prognosis being that development is much better than feared.
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The directors of the listed and in run-off retrocessional reinsurance focused investment strategy, the CATCo Reinsurance Opportunities Fund Ltd., have confirmed that they won’t look to raise further capital “in any circumstances”.
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The industry-loss warranty (ILW) market can be a driver of diversification for the insurance-linked securities (ILS) market as a whole, with growth expected in specialty lines and cyber risks.
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The collateralised reinsurance sidecar leaves a lot to be desired, speakers at a conference discussed recently, with the structure singled out as being cumbersome and inefficient, leading to an opportunity for anyone wanting to innovate and work to improve them.
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There is a chance some carriers choose to exit certain parts of the reinsurance market if rates do not materially improve at the next sets of renewals in 2020, with some Lloyd’s players in particular finding property catastrophe underwriting uneconomical currently.
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German reinsurer Hannover Re has increased the size of its capital markets backed K-Cessions quota share retro reinsurance sidecar facility to $680 million for 2020, after sharing 40% of its major catastrophe losses with retrocessionaires in 2019.
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German reinsurance giant Hannover Re has reported a more than 21% rise in net income for 2019 as the performance of its life & health (L&H) reinsurance operation more than offset the impacts of losses on its property & casualty (P&C) reinsurance result.
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The potential for trapped insurance-linked securities (ILS) collateral positions to be transferred and traded between parties is something that has come in for increasing levels of attention ever since the losses of 2017 and 2018, but still no solution has been found.
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