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).
Hannover Re, a major player in facilitation of insurance-linked securities (ILS) arrangements, via its fronting and risk transformation services using its balance-sheet, believes that trapped ILS capital amounted to between US $5 billion and $10 billion at the end of last year.
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Global reinsurance firm Hannover Re has reported an underwriting profit for its property and casualty reinsurance business for full-year 2022, despite large losses coming out above budget for the sixth year in a row.
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Having completed another collateralised stop-loss transaction, to bring more efficient capital into its business, Swiss Re may be nearing the limits of its appetite for this type of arrangement, while the sophistication required means not every reinsurer could replicate this deal.
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Neville Ching, the former retrocession managing partner at brokerage Capsicum Re, has formally launched ReFlex Solutions Ltd, an independent reinsurance brokerage headquartered in Bermuda with a mission to bring distribution efficiencies and efficient capital to market.
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Global reinsurance giant Swiss Re has secured another $700 million of alternative capital protection for severe underwriting losses, through another collateralised stop-loss arrangement using its Matterhorn Re SPI, with the funding led by investment bank J.P. Morgan.
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Speaking with Artemis, Hannover Re senior executives Silke Sehm and Henning Ludolphs explained that tapping into the insurance-linked securities (ILS) market for cyber retrocessional reinsurance capacity is a priority and with a quota share already arranged, the next step is sponsoring the reinsurer’s first cyber catastrophe bond, details of the form were not revealed.
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French insurer and reinsurer SCOR has reported a net combined ratio of 113.2% for its global P&C business in 2022 on the back of a high nat cat ratio, although its results show that the firm’s use of retrocession again helped to alleviate some of the burden of another year of high losses.
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Insurance-linked securities (ILS) investment fund manager and collateralised reinsurance underwriter Elementum Advisors, LLC, has announced five promotions of current employees to Partner at the firm, and the addition of another leader to its Executive Committee.
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Elementum Advisors, LLC, the insurance-linked securities (ILS) investment fund manager and collateralised reinsurance underwriter, is to benefit from a further $100 million investment into its range of ILS funds from stakeholder and key investor White Mountains.
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The retrocession program of global reinsurance giant Munich Re has shrunk slightly for 2023 as the company navigated the challenging market environment, while still securing $513 million of collateralised capacity for its quota share sidecar vehicles.
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