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).
The CATCo retrocessional reinsurance investment portfolio has continued to experience favourable development against prior loss year side pockets, with additional value recovered in April.
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The mid-year reinsurance renewals and catastrophe bond activity saw positive developments in market dynamics according to hedge fund specialist manager K2 Advisors, which has also updated its view to “strongly overweight” for retrocession investments, in response to improved conditions.
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The next major set of reinsurance renewals, at January 2023, are set to be a key test for the property catastrophe reinsurance market, in defining whether or not we’re really in a true hard market, according to analysts at JMP Securities.
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Tickets are still available for Artemis London 2022, our first insurance-linked securities (ILS) conference in the City, which we’re holding on September 6th 2022, just before the industry heads to Monaco for the RVS.
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It’s becoming increasingly clear that losses to the aviation class of insurance and reinsurance business caused by the Russia – Ukraine conflict have the potential to impact retrocessional covers and perhaps some third-party capitalised sidecars.
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Some catastrophe bond funds have been able to moderate the impacts of broadly widening spreads through their diversification in recent weeks, with diversifying perils and regions experiencing less significant widening on outstanding cat bonds, so delivering better returns in May and June.
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As the retrocessional reinsurance marketplace remains capacity constricted, especially for lower down and catastrophe exposed attachments, the market has seen a resurgence in demand for weighted industry-loss warranty (ILW) products, according to Gallagher Re.
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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 the issuance of three new series of cat bond notes, totalling $90.5 million of capital markets backed capacity secured for clients.
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Specialty insurance and reinsurance underwriter the Canopius Group has now secured its first ever 144A catastrophe bond, after the debut Finca Re Ltd. (Series 2022-1) transaction priced to provide the company with $75 million of peak US catastrophe reinsurance protection.
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Rate increases secured by insurance-linked securities (ILS) funds and collateralized reinsurance vehicles at the mid-year reinsurance renewals are likely to be higher than had been expected when the negotiations began, sources have told Artemis.
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