Retrocession news

Insurance, reinsurance companies and syndicates trading in the Lloyd’s of London market should leverage ILS capital and insurance-linked securities (ILS) as just one of a range of sources of capital, in order to secure their futures, according to Paul Culham, Group Chief Underwriting Officer at Tokio Marine Kiln.

SCOR is the latest of the major reinsurance firms to report that it grew its portfolio at the January 2018 renewals, with U.S. natural catastrophe risks one area that the company deployed more capacity, as its overall premiums recorded a 3.7% increase.

The growth of ILS markets at January 1st 2018 was a factor that meant rate momentum decelerated, as they offered more capacity than a year earlier despite the major losses suffered and subsequent trapping of capital, according to reinsurance giant Hannover Re.

The two stock exchange listed ILS and collateralized reinsurance investment strategies run by Blue Capital Management, a subsidiary of Sompo International Holdings Ltd., are targeting improved returns for 2018 after experiencing substantial rate increases at the renewals.

The impressive reaction of the insurance-linked securities (ILS) market to 2017 catastrophe events shouldn’t be a surprise and the marketplace has an opportunity to do even more in the future, according to speakers and attendees at Artemis’ second conference in New York.

Rating agency Fitch questions whether the reinsurance market can sustain the rate rises seen at the January renewals throughout 2018 and beyond, as long as capital levels, including from insurance-linked securities (ILS) players, in the sector remain high and excess capacity is there to be deployed.

Due to the impacts of catastrophic events in 2017, the subsequent industry losses across reinsurance and retrocession and then the higher rates achieved at the January 2018 renewals, Markel CATCo’s listed retrocessional reinsurance fund, the CATCo Reinsurance Opportunities Fund, has a maximum portfolio return target 43% higher than it did last year.

Bermudian reinsurance firm RenaissanceRe fell to a loss for the full-year 2017 after the major catastrophe events of the third and fourth quarters, but the company took advantage of heightened investor demand for its third-party capital vehicles it seems, in particular increasing the size of its retrocessional vehicle Upsilon RFO.

New York stock exchange listed fully collateralized reinsurer Blue Capital Reinsurance Holdings Ltd., a subsidiary of Sompo International Holdings Ltd., has reported break-even result for the fourth-quarter of 2017 following impacts from the California wildfires and additional losses from hurricanes earlier in the year.

Global investment management group Aberdeen Asset Management, which has around $400 billion of assets under management and advisory, is still attracted to the insurance-linked securities (ILS) and reinsurance-linked investments space even after the major losses of 2017.