Swiss Re Insurance-Linked Fund Management

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What mattered in 2013 according to Artemis’ audience?


What mattered to Artemis’ 27,000+ strong audience of readers, from the insurance-linked securities (ILS), catastrophe bond, global reinsurance and risk transfer markets, as we moved through 2013? Here we take a look at the top stories of each month of the year.


As we started 2013 a good year was expected for the ILS and catastrophe bond market, with investor interest continuing into the start of the year and prices continuing to drop. Out most popular story of the month focused on the increasing sophistication of ILS funds, while in second was a discussion of the trend for reinsurers to manage third-party capital and ILS and in third was news of Goldman’s impending sale of its reinsurance arm.

  1. Increased sophistication of ILS funds to enable more complex catastrophe bond structures
    Munich Re said that the increasing sophistication and reinsurance knowledge of dedicated ILS and catastrophe bond investors was a development in the market which enabled the placement of more complex structures.
  2. Reinsurers managing insurance-linked funds for investors is the future
    The fully-collateralized reinsurance space had been on the up in recent years, but two of the world’s largest brokers saw fund management as an area that would increasingly see reinsurers getting involved.
  3. Goldman Sachs to offload reinsurance arm. Could it become collateralized?
    The market and media were awash with rumours about investment bank Goldman Sachs planning to sell a majority stake in its reinsurance interests


Most popular in February was the news that Nephila Capital would begin participating in the Lloyd’s of London market, a significant sign of the increasing acceptance of third-party reinsurance capital and the ILS-backed reinsurance model. Second most popular was the news that Goldman had reached an agreement on the sale of most of its reinsurance business, while third was a large Berkshire Hathaway reinsurance transaction.

  1. Nephila Capital to back $100m Lloyd’s Syndicate 2357, managed by Asta
    The news that ILS asset manager Nephila Capital would move into the Lloyd’s market providing capital for a new syndicate generated significant interest.
  2. Goldman Sachs sells 75% of Ariel Re reinsurance business to investors, say reports
    Goldman Sachs had reportedly completed the sale of 75% of its reinsurance operations, Ariel Re, to investors through a private placement.
  3. Buffett’s Berkshire Hathaway reinsures variable annuity risks, bets against longevity
    A large reinsurance transaction involving Warren Buffett’s Berkshire Hathaway Inc. which saw the firm taking on variable annuity risks and as a result assume some exposure to mortality and longevity risks.


Berkshire Hathaway also featured in March, as news of the Aon –  Berkshire Hathaway follow facility at Lloyd’s came to light. Swiss Re’s spring contingent deal also received a lot of attention and in third a discussion of the growing ILS space resonated as the market began to look forward to a bumper year.

  1. Berkshire Hathaway providing capacity for Aon’s new Lloyd’s based sidecar
    Aon said that it had signed an agreement with Warren Buffett’s reinsurance giant Berkshire Hathaway which would see the two firms team up to bring sidecar style capacity to retail customers of the broker at Lloyd’s.
  2. More details emerge on Swiss Re’s contingent capital bond issuance
    Further details emerged about a contingent capital deal from reinsurer Swiss Re which is designed to protect the reinsurer from capital shocks and solvency issues.
  3. Insurance-linked securities (ILS) set to grow its share of reinsurance capacity
    By March is was clear that the ILS space was going to continue eating into traditional reinsurance capacity as we moved through 2013.


April saw the focus truly turn onto third-party reinsurance capital and this topic dominated the month on Artemis.

  1. ILS pricing drops by up to 70% as reinsurance capital rises: Aon Benfield
    Pricing began to look softer and softer, as new ILS and cat bond deals saw oversubscription become a common feature and price declines appeared inevitable.
  2. Emerging model of ‘fast capital’ threatens traditional reinsurers: Willis Re
    April also saw discussion of the threat to traditional reinsurance firms increasing, as the fact that competing with more efficient and lower-cost capital would be tough was driven home.
  3. ILS market share of catastrophe reinsurance could double by 2017: Report
    The first of many predictions for the growth rate of the ILS market began to emerge in April, this one perhaps being a little more realistic than some others.


May saw the threat of catastrophe losses emerge, as the Oklahoma tornadoes showed that losses can never be considered that far away. With the Atlantic hurricane season and the mid-year renewals fast approaching May saw a range of topics featuring.

  1. Insured losses from Moore, Oklahoma tornado could surpass Joplin
    The tornado which struck the Oklahoma suburban town of Moore on the 20th of May looked likely to become the largest single catastrophe insured loss event of the year on U.S. soil.
  2. Alternative reinsurance capital could capture 30% of mid-year renewals
    A report suggested that the mid-year reinsurance renewals could see the participation of alternative reinsurance capital grow to as much as 30%.
  3. As primary insurance grows, reinsurers and capital markets need to be ready
    Munich Re’s Insurance Market Outlook 2013 concluded that both primary property and casualty insurance and life insurance premiums would grow strongly, while reinsurance market growth would be less rapid. We suggested that as primary markets grow reinsurers and capital market or ILS players need to follow these trends to be ready to provide the needed risk transfer capacity.


Central European floods showed that reinsurers and ILS investors are exposed to major losses in this region from flooding events. With the mid-year reinsurance renewals upon us the realisation that cheaper, more efficient, ILS and alternative reinsurance capital, would win in certain segments of the market hit home.

  1. Flooding in Central Europe a threat to reinsurers
    Flooding across Central Europe reached record levels in many towns and cities after torrential rainfall struck the region at the beginning of June. This event turned into one of the largest flood losses on record and the impact to a number of large reinsurance treaties spilled over into the ILS space with at last one asset managers ILS fund seeing some losses as a result.
  2. In catastrophe reinsurance, the cheaper capital will win: Aspen CEO
    Reduced cost means that capital can afford to be deployed for lower returns, which some believe is going to continue driving growth of alternative reinsurance capital.
  3. Cheaper ILS products to end golden era for property CAT margins: Numis
    An analysts report from Numis Securities suggested that the influence of capital market capacity and the availability of cheaper insurance-linked securities (ILS) products would end the golden era for property catastrophe margins.


In July we saw the market well into the hurricane season but found that the catastrophe bond market was still marketing deals containing U.S. hurricane risk. This continued through much of the season, which was unusual but actually shows a much greater level of acceptance and maturity in the investor market, as capital continued to back these risks.

  1. The Aon-Berkshire sidecar at Lloyd’s: a glimpse into the future of underwriting?
    We look at whether the much-discussed Aon-Berkshire Hathaway sidecar at Lloyd’s could provide a model for the future of underwriting.
  2. First storm surge catastrophe bond, MetroCat Re Ltd. 2013-1, launches
    For the first time in the history of the cat bond market, this transaction launched aiming to provide its sponsor with reinsurance cover just for storm surge, resulting from named storms.
  3. Still early days for pension fund allocations to ILS and reinsurance
    The numbers show that the trend of pension funds allocating capital to insurance-linked securities (ILS) and reinsurance-linked investment strategies has a long way to go and right now it is still early days for pension funds in insurance and reinsurance-linked investing.


While the cat bond market seemed to be becoming less fearful of marketing new U.S. wind deals during the season, our readers were still keeping a close eye on Atlantic activity meaning that any story about a possible tropical storm was extremely popular.

  1. Tropical activity increasing, tropical storm Erin likely within a day
    In the end tropical storm Erin was not a major storm, only attaining winds of 45mph and posing no threat to land.
  2. Should source of reinsurance capital worry corporate insurance buyers?
    We discussed whether it should matter to a corporate buyer of insurance if its insurers reinsurance program is backed by non-traditional reinsurance capital, perhaps third-party or capital market sourced, or traditional reinsurance capital from a rated reinsurers balance sheet?
  3. Alternative capital a disruptive force in reinsurance: Goldman Sachs
    Goldman Sachs highlighted alternative capital in reinsurance as one of eight disruptive themes in business today which it believes has the potential to reshape its sector and command an increasing level of attention from investors over years to come.


September saw the annual Rendezvous de Septembre held in Monte Carlo, as the movers and shakers of the reinsurance world converged on the town for discussions which set the tone for the remainder of the year as well as beginning renewal talks. There was no surprise that alternative reinsurance capital and ILS dominated much of the conversation at the 2013 Rendezvous.

  1. Alternative capital may squeeze out equity capital in reinsurance: Willis Re
    As alternative capital, sourced from institutional and other third-party investors, continued to flow into the reinsurance market at pace, thoughts at the Monte Carlo Rendezvous event turned to how this will change the structural landscape for reinsurers.
  2. Next $100 billion of alternative capital will transform reinsurance: Aon Benfield
    One of the points of discussion at the Monte Carlo reinsurance Rendezvous event was just how much capital might we see flow into the insurance and reinsurance market as insurance-linked securities and other fully collateralized instruments or vehicles from alternative and third-party investor sources.
  3. As reinsurers react in Monte Carlo ILS managers keep cool and carry on
    The major global reinsurance firms made clear their opinions on, and reactions to, the recent flow of capital into the reinsurance market from third-party investors, with sometimes defensive statements that could leave listeners wondering whether the nervousness ran deeper than reinsurers are making out.


The threat of a major natural catastrophe loss event always draws a lot of reader interest and October demonstrated that with our article on the first European windstorm of the season receiving thousands of views.

  1. European windstorm Christian threatens UK and northern Europe
    Insured loss estimates for Christian now range from around €800m to just over €2 billion. The storm threatened much of northern Europe and provided an early reminder of the European windstorm seasons threat to reinsurers, ILS and catastrophe bonds.
  2. Alternative capital is efficient capital: Frank Majors, Nephila CapitalFrank Majors, co-founder and principal of the world’s largest insurance-linked securities and reinsurance-linked investments manager Nephila Capital, delivered a lecture at the Insurance Institute of London. The lecture, held at Lloyd’s of London, was extremely well attended as the London re/insurance market lined up to hear one of the largest providers of alternative capital discuss his perspective on where the sector is heading.
  3. New & alternative capital to pressure commercial insurance rates in 2014: WillisCommercial insurance buyers will face improved market conditions, with rates set to improve in many lines, thanks to the increased availability of insurance and reinsurance capital from alternative sources, broker facilities and new markets such as China, according to broker Willis.


The terrible catastrophe that was Super Typhoon Haiyan again showed the insurance and reinsurance market that it has much to do to increase its penetration into developing economies to provide greater protection for emerging risk transfer markets.

  1. What if a Super Typhoon Haiyan hit Miami?
    We discussed whether the reinsurance and ILS market would be ready to face a disaster of the severity of Haiyan if it were to impact an area of high insurance and reinsurance penetration.
  2. JLT launches JLT Towers Re, reveals name of new capital markets unit
    The combined reinsurance brokerage unit created by Jardine Lloyd Thompson’s (JLT) acquisition of the Towers Watson reinsurance brokerage division, JLT Towers Re, was officially launched.
  3. Reinsurance, capital markets should lead way on loss & damages
    In the wake of the devstating typhoon we suggested that the reinsurance market and capital markets providers of catastrophe risk protection need to lead the way and become more engaged in discussions on how to better mitigate losses and damages from major natural catastrophe events.


December saw another European windstorm threat which again became the most viewed article of the month showing the markets concern about this peril.

  1. European windstorm Xaver brings another reminder of winters threat
    Xaver brought a major storm surge to coastal areas of northern Europe, bringing flooding into the loss for reinsurers. The expected loss from European windstorm Xaver is in the range of €700m to €2 billion.
  2. Capsicum Re reinsurance broker coming from AJ Gallagher & Chilton
    Reinsurance broking industry veteran Grahame “Chily” Chilton teamed up with Arthur J. Gallagher (AJG) to launch a new reinsurance broker brand, Capsicum Re.
  3. Volcker Rule passes with no exemption for insurance-linked securities
    The issuance of the final ruling developed by five U.S. government agencies to implement the Volcker Rule, which is section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, did not include an exemption for insurance-linked securities.

Note: We realise December is not over quite yet but we’re confident that these will be the three most read stories of the month.

We hope you enjoyed this look back at the stories that mattered on Artemis over the course of 2013. Each month sees around 70 to 100 new articles published on Artemis, with the majority being read many hundreds of times. The Artemis audience has grown signficantly throughout 2013, finishing the year with over 27,000 unique visitors to the Artemis website per month.

That makes Artemis one of the largest single audiences which is focused on reinsurance, ILS and risk transfer in the world on any medium. If you’d like to learn more about how to leverage this audience to increase your own exposure through advertising or sponsorships please do get in touch.

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