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
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 apparent impairment of global dedicated reinsurance capital is set to create “generational” opportunities for underwriting companies, according to David Flandro and Michelle To of Howden Broking.Read the full article
Speaking this morning at a briefing held in advance of the annual Baden-Baden reinsurance meetings in Germany, Thomas Blunck, member of the board of management at Munich Re, explained that trapped ILS capital after hurricane Ian could influence reinsurance renewals across the European region.Read the full article
The world has a “vibrant wholesale risk market”, spanning insurance, reinsurance and insurance-linked securities (ILS), but it’s time to go back to basics, industry expert speakers explained at Convergence 2022 in Bermuda last week.Read the full article
Two of Australia’s largest insurers have both slashed their reserve provisions for business interruption claims from the COVID-19 pandemic after last week’s test case ruling.Read the full article
The second test case in the High Court of Australia regarding the interpretation of policy wordings in business interruption policies after the COVID-19 pandemic, has been resolved in favour of insurers after appeals were denied, a move that has positive implications for the release of some trapped ILS capital, we’re told.Read the full article
During a panel discussion at the ILS Bermuda Convergence 2022 event yesterday, Michael Millette told the audience that while the quantum of loss matters after hurricane Ian, with such a range of estimates, the risk is that cedents will all seek to trap capital as if the industry impact is going to be $70 billion […]Read the full article
Insurance-linked securities (ILS) fund managers have been working to free trapped capital related to possible COVID pandemic related losses in European reinsurance contracts, with commutations being pursued, AM Best has reported.Read the full article
Managers of insurance-linked securities (ILS) funds and other strategies are pushing back on what is seen as still excessive trapping of capital linked to COVID-19 related claims, as confidence rises that the eventual impacts of this will be relatively limited for the ILS market.Read the full article
Rate increases alone are no longer considered sufficient to improve the underwriting results of insurance-linked securities managers and reinsurance firms, according to AM Best, who believes that after consecutive years of heavy catastrophe losses the only answer is continued improvement of the quality of portfolios of risk.Read the full article