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).
In order for new investor capital to flow to retrocessional ILS opportunities, the retro tier of the market must first demonstrate that it can make a margin over and above that earned in first-tier reinsurance, to compensate for a lack of transparency, James Vickers, Chairman International, Reinsurance, at Gallagher Re has said.
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With catastrophe bond spreads rising alongside traditional reinsurance and retrocession, the market is now experiencing its biggest pricing reset since hurricane Katrina in 2005, according to Plenum Investments.
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Rates-on-line for non-marine catastrophe retrocessional reinsurance are now up approximately 165% on their 2017 lows, analysts at Jefferies have pointed out using data reported by broking group Howden.
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Stone Ridge Asset Management’s mutual insurance-linked securities (ILS) fund that is structured in an interval style has delivered a positive annual return in the period to October 31st 2022, despite its broad exposure to hurricane Ian.
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Towards the end of the year, as the challenging January 2023 reinsurance renewal season neared its completion, lower than expected loss estimates related to hurricane Ian eased some concerns related to trapped ILS capital and this assisted in clearing retrocession placements, broker Gallagher Re said today.
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Risk-adjusted non-marine catastrophe retrocession excess-of-loss rates-on-line rose by 50% at the January 2023 renewals, while global property catastrophe reinsurance rates rose 37%, according to international broking group Howden.
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Despite a particularly bruising January 2023 reinsurance renewal season that broker Gallagher Re calls tense and late, the market is reported to have resolved many of the issues holding up clearing and the renewals are largely complete.
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Bermuda headquartered specialist reinsurer and third-party capital manager RenaissanceRe has now successfully secured $185 million of collateralized retrocessional reinsurance with its new Mona Lisa Re Ltd. (Series 2023-1) catastrophe bond, with the total falling just short of the maximum upsized target.
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Reinsurance capital levels experienced additional downward pressure through the second-half of 2022 according to Guy Carpenter, but the broker also highlighted some new capital inflows in the final month of the year.
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Isosceles Insurance Ltd., the Bermuda-domiciled private insurance-linked securities (ILS) and catastrophe bond platform operated by Marsh McLennan and reinsurance broker Guy Carpenter, has completed another private cat bond note issuance, with an $18.48 million Isosceles Insurance Ltd. (Series 2022-H) deal.
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