secondary cat bond

Berenberg, the private banking, investment banking, asset and wealth management specialist, will offer catastrophe bond trading over-the-counter (OTC) within its fixed income division, responding to what it sees as growing client demand for access to cat bond investments.

BMS Re, the reinsurance arm of the international broking group, has hired former Nephila Capital employee Brendan O’Brien to further build out its Bermuda reinsurance and retro offering, as well as to support its secondary catastrophe bond trading plans.

The secondary market for catastrophe bonds has again demonstrated that timing can be everything when it comes to trading in liquid markets, or conversely that some investors may get proven to have been prescient with their trade selections, when it comes to catastrophe bond market losses from hurricane Ian.

The insurance-linked securities (ILS) desk of Tullett Prebon, part of TP ICAP, will have a new leader, with Josh Stannack set to take on the Head of TP ILS position, and the desk’s founder Steve Emmerson will remain integral to the business in a part-time role.

Bid prices have recovered somewhat for a number of catastrophe bond positions that had been deemed particularly exposed to potential losses from hurricane Ian, with a number of the most Florida wind exposed positions appreciating in the last week, as well as the NFIP’s flood cat bonds.

Another positive signal that the catastrophe bond market may already have fully marked in loss expectations from hurricane Ian, is the fact that on secondary market cat bond pricing sheets, there were many more outstanding bonds that gained in price, than lost any further ground last Friday.

So far, major hurricane Ian’s approach to the west coast of Florida and the Tampa Bay region has not stimulated a significant amount of catastrophe bond trading, with the secondary market relatively quiet. Except for one telling trade that shows investor nerves over potential storm surge impacts are rising.

Additional loss creep from 2021’s hurricane Ida has now eroded another layer of Louisiana Citizens’ catastrophe bond backed reinsurance protection, with the $50 million Class B notes of the residual market insurers’ Pelican IV Re Ltd. (Series 2021-1) cat bond set to pay out all of their principal in a reinsurance recovery.

Louisiana Citizens Property Insurance Corporation has reported an estimated loss from hurricane Ida of around $461 million, but thanks to its low retention on its reinsurance tower and its catastrophe bonds, the residual market insurer will only retain $35 million.

Yesterday, October 5th 2021, saw what appears to be the most significant day of catastrophe bond names “trading” and being registered on the FINRA Trade Reporting and Compliance Engine (TRACE) ever, with somewhere around 114 individual names, or tranches, of cat bond notes recorded as seeing activity.