Retrocession news

Catastrophe bonds represent a growing portion of the alternative reinsurance capital market at this time, with their perceived benefits for investors helping to promote expanding growth of this segment, Fitch Ratings has said.

Submitting “rich supply curves” for reinsurance capacity can result in a more successful allocation for a reinsurer, according to Tremor Technologies, the insurtech operator of a programmatic risk transfer marketplace.

While the recent reinsurance renewals saw significant ground recovered on pricing and terms, a number of challenging themes remain and the industry must address systemic risk themes to attract enough new capital to meet significant demand, Mike Mitchell of Swiss Re has said.

Hurricane Ian was an important test for the profitability of the global insurance and reinsurance market, according to analysts at Goldman Sachs and their comments read-across positively for the insurance-linked securities (ILS) market as well, as returns there also show the “strength of the cycle working through.”

Elevated, near-record returns and still-evident asset class diversification benefits, leave insurance-linked securities (ILS) and alternative capital in reinsurance poised for strong growth, according to Aon’s Reinsurance Solutions.

As the catastrophe bond market continues to deal with the effects of the 2022 Atlantic hurricane season, Tom Johansmeyer, Head of PCS, Verisk Insurance Solutions, expects demand for industry loss triggers to persist for some time.

Stone Ridge Asset Management, the New York based asset manager an alternative risk premia focus, including reinsurance and insurance-linked securities (ILS), has provided US $100 million in capital to support an innovative retrocession cyber quota share arrangement for global reinsurance firm Hannover Re.

The Australian Reinsurance Pool Corporation (ARPC), which administers Australia’s terrorism insurance scheme, has renewed its retrocessional reinsurance program to provide $3.5 billion of coverage for 2023, as a multi-year retro purchase in 2022 proved beneficial as it navigated the harder market this year.

Re/insurer MS Amlin has sponsored a third capital market arrangement that provides it with Asian property catastrophe retrocessional protection and for 2023 the company has upsized its collateralised reinsurance sidecar arrangement, with Phoenix 3 Re Pte. Ltd. coming out at $45 million.

The global market for catastrophe bonds has the potential for another strong year in 2023, with a robust pipeline building and as much as $11 billion of issuance possible, if market conditions are conducive, according to Cory Anger of GC Securities.