Retrocession news

As the insurance-linked securities (ILS) market continues to reset itself after a number of years of heavy catastrophe losses, growth is likely to be more prominent in areas such as catastrophe bonds and top-layer peak peril strategies, that have displayed more consistent performance, Twelve Capital’s Marcel Grandi believes.

Growth of the insurance-linked securities (ILS) market is not as assured as it might seem, with a number of potential threats to it. But Tom Johansmeyer, Head of PCS at Verisk, believes there is plenty of opportunity for ILS expansion, with specialty retrocession one clear area for ILS market growth.

According to data from AM Best, just $850 million of catastrophe bonds and other insurance-linked securities (ILS) are held by US insurers in their investment portfolios, a surprising low number given the evident diversification they can offer.

Cedents are increasingly looking to diversify away from the “rhetoric” of the traditional reinsurance market and this is one of the factors causing Paul Schultz to be very constructive on catastrophe bond market development right now.

After increasing the size of its reinsurance sidecar transaction in 2021, followed by the issuance of its first catastrophe bond earlier this year, Hong Kong domiciled reinsurer Peak Re aims to further leverage the insurance-linked securities (ILS) market to close the protection gap.

In working with third-party capital investors, Vantage Risk Ltd., the almost two year’s old Bermuda headquartered insurance and reinsurance company, sees it as important to help mitigate challenges investors have faced with traditional ILS products.

Leaders at Lockton Re, the reinsurance arm of the global broker, have said they are expecting additional third party capital players to enter the space next year, who may have been watching the market develop from the sidelines in recent years.

As the insurance-linked securities (ILS) market shifts its thoughts towards the end of year reinsurance renewal negotiations, Tom Johansmeyer, Head of PCS at Verisk believes there could be more pressure on ILS capital to come, especially in retrocession and specialty areas of the market.

We’ve developed an industry-loss warranty (ILW) pricing data set from information we’ve gathered over the years, as well as recent input from our market sources that helped validate this new Artemis data service.

The retrocessional reinsurance market is expected to face still-limited capacity at the key January 2023 renewal season, according to Guy Carpenter’s CEO of Global Specialties, James Boyce.