Retrocession news

The threat of loss to investors in mortality catastrophe bonds has increased in recent weeks, with Swiss Re’s Vita Capital VI deal marked down for a near total loss and one of the Matterhorn Re cat bonds sponsored by the reinsurer has seen its maturity extended, as mortality estimates have risen again, Artemis has learned.

Artemis has learned that Hannover Re’s key whole account catastrophe excess-of-loss retrocession renewal was completed with pricing flat on a risk-adjusted basis, as higher exposure levels for large retro towers were met with comparably higher rates, resulting in roughly flat outcomes at January 1st.

With one month still to be counted, the Eurekahedge ILS Advisers Index has already set a new record high annual return in 2023, as the average return of the insurance-linked securities (ILS) funds tracked rose to 13.33% after November.

Investors in reinsurance sidecar structures have been “handsomely rewarded” for their commitment to the product in 2023, broker Aon has said, as these reinsurance-linked investments have experienced strong returns of above 30% in some cases.

With attachment points still higher across the global reinsurance and retrocession markets, the effect of retaining more risk on balance-sheet is anticipated to drive an upwelling of demand for lower-layer catastrophe covers, according to analysts at Goldman Sachs.

Stone Ridge Asset Management, the New York based asset manager an alternative risk premia focus, has experienced continued asset under management growth for its mutual insurance-linked securities (ILS) fund strategies, with total AUM rising another 10% in the last quarter to reach $3.9 billion at October 31st 2023.

Inflows of capital to certain insurance-linked securities (ILS) managers and structures has helped in moderating retrocession pricing at the January 2024 renewals, resulting in a much less stressed market and better outcomes for some retro buyers.

Stone Ridge Asset Management, the New York based asset manager with an alternative risk premia focus, made well over $1 billion in reinsurance trading profits over the course of 2023, with record returns delivered to investors by both of its mutual insurance-linked securities (ILS) fund strategies, according to CEO Ross Stevens.

The January 1st 2024 reinsurance renewals saw a more stable market environment thanks to more favourable supply dynamics, but still property catastrophe rates-on-line are estimated to have risen by 3%, according to broking group Howden.

Craig Hupper, an executive from global reinsurance company TransRe who is well-known and liked in the insurance-linked securities (ILS) community, is set to retire from the firm at the end of this year, Artemis has learned.