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).
In an interview with A.M. BestTV at Artemis’ second ILS conference in New York City, PCS Assistant Vice President (AVP), Tom Johansmeyer, discussed the potential for the insurance-linked securities (ILS) market to expand further into the cyber space, after proving its worth in 2017.
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The insurance-linked securities (ILS) investor base remained calm and orderly during the extremely active 2017 Atlantic hurricane season, and in fact, as hurricane Irma moved up the coast, Swiss Re’s Judith Klugman was surprised at just how willing investors were to provide additional capital.
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The Upsilon strategy has evolved this year, with its book becoming more balanced between retrocession and primary reinsurance, as the collateralized reinsurance vehicle grew to $800 million of limit for owner RenaissanceRe but rates on the retro side were not sufficiently high to deploy all of the capital raised.
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Markel CATCo Investment Management Ltd., the collateralized reinsurance and retrocessional investment fund manager, lifted its ILS assets under management to a new high of $6.1 billion by the end of 2017, which includes the collateral held to pay for incurred losses.
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Following the impacts of 2017 catastrophe events and the subsequent impressive response from the insurance-linked securities (ILS) industry, Kathleen Faries, Head of Tokio Millennium Re’s Bermuda branch, believes that in terms of the rate and return environment, this is the new market.
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Insurance, reinsurance companies and syndicates trading in the Lloyd’s of London market should leverage ILS capital and insurance-linked securities (ILS) as just one of a range of sources of capital, in order to secure their futures, according to Paul Culham, Group Chief Underwriting Officer at Tokio Marine Kiln.
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SCOR is the latest of the major reinsurance firms to report that it grew its portfolio at the January 2018 renewals, with U.S. natural catastrophe risks one area that the company deployed more capacity, as its overall premiums recorded a 3.7% increase.
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The growth of ILS markets at January 1st 2018 was a factor that meant rate momentum decelerated, as they offered more capacity than a year earlier despite the major losses suffered and subsequent trapping of capital, according to reinsurance giant Hannover Re.
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The two stock exchange listed ILS and collateralized reinsurance investment strategies run by Blue Capital Management, a subsidiary of Sompo International Holdings Ltd., are targeting improved returns for 2018 after experiencing substantial rate increases at the renewals.
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The impressive reaction of the insurance-linked securities (ILS) market to 2017 catastrophe events shouldn’t be a surprise and the marketplace has an opportunity to do even more in the future, according to speakers and attendees at Artemis’ second conference in New York.
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