We’ve learned that the hurricane Ian side pocket investment situation has improved considerably for some insurance-linked securities (ILS) fund managers, with a number of key exposures now failing to reach the levels of cedent loss needed to attach coverage in recent weeks.Read the full article
Trapped ILS capital news
What is trapped collateral, or trapped ILS capital? When an insurance-linked securities (ILS) contract is seen to be at-risk of facing losses, sometimes the cedent can call for the collateral (or capital backing the ILS deal) to be trapped or frozen, so it remains available while loss development continues.
The collateral is trapped and unavailable for reinvesting into new ILS contracts, which can create a drag on ILS investment portfolios. The ILS capital can remain trapped for months or years until the ultimate loss associated with the contract is clear and a payout is deemed due or otherwise.
The “opportunity cost” of having collateral trapped from prior year events is, in the current higher reinsurance rate environment, increasingly in focus among the insurance-linked securities (ILS) fund manager community, Megan Green of PwC Bermuda told us in a recent video interview.Read the full article
According to our sources, insurance-linked securities (ILS) fund managers are having continued success at closing down certain exposures to last year’s hurricane Ian, with a number of side pockets being finalised and trapped capital continuing to be freed.Read the full article
We’ve learned from sources that a number of insurance-linked securities (ILS) fund managers have recently been able to further reduce the size of investment side pockets they had established related to hurricane Ian.Read the full article
Hannover Re, a major player in facilitation of insurance-linked securities (ILS) arrangements, via its fronting and risk transformation services using its balance-sheet, believes that trapped ILS capital amounted to between US $5 billion and $10 billion at the end of last year.Read the full article
All of the changes enacted at the latest Florida Special Session will have a positive impact on the region’s property market, but the benefits will need to be proved before reinsurers and insurance-linked securities (ILS) markets really jump back in, according to experts from across the space.Read the full article
Some of the side-pockets established by insurance-linked securities (ILS) funds in the wake of hurricane Ian are now being reduced in size, as estimates from the storm continue to trend lower than originally expected, according to Artemis’ sources in the ILS investment community.Read the full article
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.Read the full article
The recently enacted legislative reforms to Florida’s property insurance marketplace have the potential to alleviate some of the concerns of the insurance-linked securities (ILS) industry over prolonged trapping of capital, according to AM Best.Read the full article
Higher-risk focused insurance-linked securities (ILS) fund strategies appear to be averaging losses around the 17% mark after hurricane Ian, according to a report from Frontier Advisors.Read the full article