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).
Speaking during the second-quarter earnings call for insurance giant AIG, the insurers’ CEO Peter Zaffino explained that the company took steps to bulk up its hurricane reinsurance and retrocessional protection in advance of the wind season beginning.
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Analysing the insurance-linked securities (ILS) market outlook for the third-quarter of 2023, K2 Advisors, the hedge fund focused investment management unit of Franklin Templeton, believes spreads could tighten further, especially in catastrophe bonds, but it remains constructive on ILS and has now signalled an overweight view on industry-loss warranties (ILW’s).
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Pure catastrophe bond funds as a group were up an impressive 7.17% for the first-half of 2023, narrowly beating the 6.91% average return of the private ILS funds that invest in collateralised reinsurance and retrocession opportunities as well, the latest data from ILS Advisers shows.
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According to Conduit Re CEO Trevor Carvey, when it came to securing the reinsurers first slice of retrocession from the catastrophe bond market this year, the pricing for the firm’s debut $100 million Stabilitas Re Ltd. (Series 2023-1) was “in our sweet spot.”
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The secondary market price for the Vita Capital VI Limited (Series 2021-1) mortality catastrophe bond transaction that was sponsored by global reinsurance firm Swiss Re has dropped, with the market seemingly anticipating an increasing chance of losses being paid under the terms of the notes.
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According to our sources, insurance-linked securities (ILS) fund managers are having continued success at closing down certain exposures to last year’s hurricane Ian, with a number of side pockets being finalised and trapped capital continuing to be freed.
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For reinsurance broker Guy Carpenter two areas of specific growth during the second-quarter of 2023 were the insurance-linked securities (ILS) market and global retrocession, with capital inflows seen to help activity increase, according to President and CEO Dean Klisura.
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Aeolus Capital Management Ltd., the Bermuda based reinsurance and insurance-linked securities (ILS) investment fund manager, has been the beneficiary of fresh investor client inflows in advance of the mid-year renewals, we understand, taking its overall assets under management (AUM) to $3.9 billion.
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We return to London on Tuesday September 5th for our next insurance-linked securities (ILS) market conference, with Artemis London 2023 our second event held in the city and there are now only a few days left to secure a ticket at the best possible price.
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Expansion of the insurance-linked securities (ILS) asset class into other lines of business such as cyber risks is not likely to be a case of a reallocation away from property, rather Artex Capital Solutions executives believe that incremental growth of non-cat ILS is to be expected.
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