specialty reinsurance

Bermuda headquartered ILS fund and investment manager ILS Capital Management Ltd. is adjusting the operating model of its reinsurance vehicle Prospero Re Ltd. to add an element of leverage, while retaining the benefits of collateralized coverage.

While loss creep, trapped collateral and the general ongoing impacts from prior year reinsurance related catastrophe losses continue to plague the insurance-linked securities (ILS) market, it’s important to remember that the asset class can still deliver significant value, in terms of investor returns.

When the roof of Notre Dame Cathedral in Paris caught fire recently perhaps the last thing thought of was potential exposure for the insurance-linked securities (ILS) market. But it’s becoming clear there is a small chance some specialty lines ILS positions could be threatened by the fire.

While negative performance of ILS and collateralized reinsurance portfolios has been the talk of recent months, after the consecutive years of catastrophe loss activity, as ever performance is divergent in this market and ILS Capital Management was one of those that fared better in 2018.

The reinsurance market is expected to take a much closer look at the adequacy of pricing and profitability for many longer-tailed lines of specialty and casualty business, especially as reinsurers have generally been unable to command the payback they may once have been used to, following the catastrophes of 2017.

Specialty insurance and reinsurance firm Brit Ltd. has announced the launch of a new specialty re/insurance platform, Scion Underwriting Managers, which it says will partner both with its own balance-sheet, other markets and also third-party capital providers.

The London insurance and reinsurance market will see continued price softening in 2017, albeit at a reducing pace, according to PwC, which the consultancy believes will result in around a third of the market experiencing an underwriting loss next year.

The forthcoming launch of the first marine cargo and specie catastrophe risk model from RMS will provide an enhanced approach to marine risk quantification, helping ILS investors and capital to increase participation in the marine insurance and reinsurance market.

Specialty products in the U.S. property & casualty insurance marketplace is an increasingly attractive area of the market, as it offers an “attractive strategic alternative to achieving scale in the standard commercial property/casualty (P/C) insurance industry,” according to S&P.

When much of the coverage of ILS discusses lower returns of ILS and catastrophe bond investments, Bermuda-based asset manager ILS Capital Management Ltd. provides an example of just how attractive insurance-linked investments can be with a 19.7% post-fees return in 2014.