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.

 

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Hiscox reports reduced deployable ILS capital, keeps powder dry for cat risks

Hiscox Group, the specialist insurance or reinsurance underwriter and ILS capital manager, has reported a shrinkage in its deployable insurance-linked securities (ILS) capital and a reduction in its appetite for catastrophe risks, as it keeps its powder dry for future opportunities. The company said it is remaining disciplined in its Hiscox read the full article →

Bermuda SPI guidance update clarifies collateral rollover, release & clawback positions

An update to the Bermuda Monetary Authority's (BMA) guidance notes on special purpose insurers (SPI's), the most commonly used structure for transacting insurance-linked securities (ILS) and collateralised reinsurance, lays out the regulators position on key issues related to collateral rollover, release of collateral and also the subject of clawback. The 2020 read the full article →

ILS an instrumental part of solving Asia’s protection gap: Schultz, Aon Securities

The trend of insured against uninsured losses across the Asia Pacific region is not sustainable, and the insurance-linked securities (ILS) market will need to play an integral role in addressing the issue, according to Paul Schultz, Chief Executive Officer (CEO) of Aon Securities. The Asia Pacific region is extremely vulnerable to read the full article →

Fragile market, perhaps significant ILS capital trapping, to sustain rates – CS analysts

The reinsurance marketplace remains fragile after a number of years of subpar returns and more recent stresses, which is expected to help price increases continue into 2021, albeit at decelerating positive rate levels, according to equity analysts at Credit Suisse. Having spoken with reinsurers and also insurance-linked securities (ILS) sector experts, read the full article →

Covid-19 losses to take years to catch up to industry estimates: Willis Re

Currently, bottom-up Covid-19 pandemic loss announcements from insurance and reinsurance companies stand at only around $6 billion, some way short of the wide ranging $30 billion to $100 billion industry loss estimates and broker Willis Re warns it will likely take years to catch up which has ramifications for the read the full article →

Covid uncertainty highlights need for risk transfer transparency: Majors, Nephila

The uncertainty that the Covid-19 pandemic has created for the insurance and reinsurance industry serves to further highlight the need for risk transfer data transparency, all the way down the market chain, according to Nephila Capital Co-CEO Frank Majors Speaking with us in a video interview back in April, which you read the full article →

Cat bonds again show investor benefits during a crisis: Anger, GC Securities

Throughout the current crisis, the catastrophe bond marketplace has once again shown its resilience and ability to perform differently to the broader capital markets, according to Cory Anger of GC Securities. Artemis recently spoke with Anger, Managing Director of GC Securities, the specialist insurance-linked securities (ILS) division of reinsurance broker Guy read the full article →

Artemis Live: Interview with Niklaus Hilti, Credit Suisse Insurance Linked Strategies

Our latest video interview is with Niklaus Hilti, Chief Executive Officer and Chief Investment Officer of Credit Suisse Insurance Linked Strategies, who kindly joined us to discuss the current status of the ILS investment space and reinsurance market trends. All of our Artemis Live video interviews can be accessed directly from read the full article →

ILS funds shift to more remote layers & tighter terms in hard(er) market

As well as enhancing their returns thanks to rising pricing, insurance-linked securities (ILS) fund managers are seeking to capitalise on the hardening reinsurance and retrocession market in a number of other ways that could result in their portfolios delivering better returns and becoming less volatile. We're as guilty as most observers read the full article →

Rate improvements to continue at July renewals: Volpi, Leadenhall

Reinsurance pricing is expected to rise strongly at the July 1st 2020 renewals, with retrocession likely to be an area of particular increase, according to Lorenzo Volpi, Head of Business Development at Leadenhall Capital Partners LLP. Volpi and Leadenhall are anticipating rate increases of between 20% to as high as 40% read the full article →