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).
Cyber reinsurance capacity needs to grow threefold by 2030 to support the cyber insurance segment in fulfilling its potential, and focus is needed to maintain momentum in making third-party capital a key component of the cyber market’s capital structure, broker Howden has said.
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While the insurance-linked securities (ILS) market is now beginning to see broader growth resuming, with some successful capital raises across private ILS and collateralized reinsurance, the catastrophe bond market is still leading the way as the main source of ILS market growth in 2023, Aon Securities’ latest data shows.
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The returns of private ILS funds, so those that invest in privately transacted insurance-linked securities (ILS) including collateralised reinsurance and retrocession, have outpaced pure catastrophe bond funds for the first time this year in May 2023.
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The retrocession market was more orderly at 2023’s mid-year renewal season, with capacity less constrained and as a result more buyers being satisfied, but still catastrophe retro reinsurance rates have risen by 30% to 60% and higher in some cases, broker Gallagher Re explained.
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The pricing of recent industry index catastrophe bond issues have been at levels last seen prior to hurricane Ian, leading broker Aon to suggest “a quantifiable return to pre-Ian pricing dynamics” has occurred.
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Stone Ridge Asset Management, the New York based asset manager an alternative risk premia focus, saw its dedicated mutual insurance-linked securities (ILS) fund assets under management (AuM) remain relatively flat in the last quarter of record, but the manager started adding catastrophe bonds and sidecar investments to another alternatives fund.
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In advance of the end of the quarter, Artemis can now report that issuance of property catastrophe bonds in the first-half of 2023 will close out June at an all-time high for the period of almost $9.7 billion, which beats the full-year total from 2022 and sets a new record for any half-year of cat […]
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Insurance-linked securities (ILS) investors appear ready and willing to take on more peak peril severity catastrophe risk, if the price is right, leading analysts at Peel Hunt to suggest the ILS market is primed for growth.
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Numerous insurance-linked securities (ILS) fund strategies have delivered decadal high returns, at least, so far in 2023, as the higher reinsurance rate environment and elevated spreads for instruments like catastrophe bonds boost their performance.
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One of the interesting trends seen in the catastrophe bond market through recent years and a clear reaction to loss activity experienced, is the shift away from aggregate cat bond coverage, back towards per-occurrence structures becoming the more dominant form seen.
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