Retrocession news

Bermudian reinsurance firm and third-party capital manager RenaissanceRe Holdings Ltd. has estimated that the October 2017 California wildfires will have a net negative impact of $90 million on its fourth quarter 2017 results.

There are fears that trapped collateral could result in ILS capital becoming more scarce at the upcoming January reinsurance renewals, as to-date it does not appear that all of the ILS market’s capacity that has been eroded by recent catastrophe losses has been replaced.

New York stock exchange listed fully collateralized reinsurer Blue Capital Reinsurance Holdings Ltd. has increased its median return target for 2018 to as much as 14.9%, on the back of an expectation of prices rises across the reinsurance sector, with some loss affected contracts expected to see rate increases of as much as 25%.

Markel CATCo Investment Management Ltd., the collateralized reinsurance and retrocessional investment fund manager, has successfully raised $543 million of new capital from investors for its stock exchange listed retrocession focused CATCo Reinsurance Opportunities Fund.

Bermuda reinsurance firm RenaissanceRe continued to grow the size of its third-party investor capital backed retrocessional reinsurance vehicle Upsilon through the mid-year renewals and into the third-quarter, reporting that the total assets of Upsilon RFO had jumped to $453.8 million, on a U.S. GAAP accounted basis.

A new Guernsey based reinsurance start-up, Brilliant Reinsurance (Guernsey) Limited, has been launched, becoming Guernsey’s first re/insurer with backing from China and targeting the provision of retrocession to underwriters in the Lloyd’s of London market.

Senior reinsurance industry executives said that the market cycle is likely to be less “violent” going forwards, with fewer radical price movements as the industry matures and “patient” alternative capital helps to smooth our the peaks and troughs.

The Massachusetts Pension Reserves Investment Management (MassPRIM) Board has approved $250 million of investments in two reinsurance and ILS investment managers, as the $68 billion state pension asset manager looks for diversifying asset classes with low correlation to its wider portfolio.

The CEO and CFO of specialist insurance and reinsurance group Hiscox believe that post-loss price rises could last for two years, following the recent major catastrophes, and have told their underwriters to be prepared to shrink the top-line if they cannot get the price increases they seek.

Rates-on-line for industry loss warranties (ILW’s) have increased by as much as 30% following the third-quarter catastrophe losses suffered by the industry, perhaps giving a glimpse of where retrocessional reinsurance could move at the forthcoming January renewals.