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).
After a trip to Bermuda to speak with reinsurance executives on the island, analysts from BMO Capital Markets said the expectation seems to be that 2025 renewals will see property catastrophe reinsurance rates fall between 5% and 10%, while retrocession renewal pricing may fall as much as 10% to 20%.
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Mapfre Re has increased the target size for the amount of retrocessional reinsurance it hopes to secure from its debut catastrophe bond sponsorship, with the Recoletos Re DAC (Series 2024-1) issuance now aimed for $125m, while at the same time the price guidance has been lowered.
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RenaissanceRe has successfully priced its latest catastrophe bond and secured the upper-end target size for coverage from the deal, with the Mona Lisa Re Ltd. (Series 2025-1) issuance now finalised to provide the company $350 million of collateralized retrocessional reinsurance from the capital markets.
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Speaking with a number of reinsurance buyers regarding their outlooks for January 2025 renewals, it’s clear most are resigned to attachment points remaining at or near the more elevated levels set in recent years, but they are hopeful that aggregate coverage will become more available, especially from the capital markets.
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Signal Iduna Reinsurance Ltd. (SI Re), a Switzerland based reinsurer located in the city of Zug, has promoted its insurance-linked securities (ILS) and retrocession lead Dr Robert Salzmann to become Chief Underwriting Officer and also appointed him to the Executive Board of the company.
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RenaissanceRe has for a second time increased the target size for its latest catastrophe bond, with the company now seeking $350 million of multi-peril retrocessional reinsurance from the Mona Lisa Re Ltd. (Series 2025-1) issuance.
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Reflecting the ability of the majority of the market to absorb initial mark-to-market losses from hurricane Milton within just a number of weeks, the broad benchmark index for insurance-linked securities (ILS) funds, the Eurekahedge ILS Advisers Index, delivered a positive 0.81% return for the month of October 2024.
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RenaissanceRe has increased the target size for its latest catastrophe bond, with the company now seeking $300 million in multi-peril retrocession from the Mona Lisa Re Ltd. (Series 2025-1) issuance, while the price guidance has fallen for both tranches of notes.
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As losses from natural catastrophe and severe weather continue to rise around the world, analysts at investment bank Berenberg believe this means there is “no excess capital buildup among the traditional reinsurers,” leading them to anticipate a “strong-for-longer” reinsurance cycle.
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It’s official. If the current pipeline of new deals all complete before year-end, at their current targeted sizes or larger, then the catastrophe bond market will set a new record for primary issuance in 2024 of roughly $16.54 billion, according to Artemis’ Deal Directory data.
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