Retrocession news

Markel CATCo Investment Management Ltd., the collateralized reinsurance and retrocessional investment fund manager, has successfully raised $543 million of new capital from investors for its stock exchange listed retrocession focused CATCo Reinsurance Opportunities Fund.

Bermuda reinsurance firm RenaissanceRe continued to grow the size of its third-party investor capital backed retrocessional reinsurance vehicle Upsilon through the mid-year renewals and into the third-quarter, reporting that the total assets of Upsilon RFO had jumped to $453.8 million, on a U.S. GAAP accounted basis.

A new Guernsey based reinsurance start-up, Brilliant Reinsurance (Guernsey) Limited, has been launched, becoming Guernsey’s first re/insurer with backing from China and targeting the provision of retrocession to underwriters in the Lloyd’s of London market.

Senior reinsurance industry executives said that the market cycle is likely to be less “violent” going forwards, with fewer radical price movements as the industry matures and “patient” alternative capital helps to smooth our the peaks and troughs.

The Massachusetts Pension Reserves Investment Management (MassPRIM) Board has approved $250 million of investments in two reinsurance and ILS investment managers, as the $68 billion state pension asset manager looks for diversifying asset classes with low correlation to its wider portfolio.

The CEO and CFO of specialist insurance and reinsurance group Hiscox believe that post-loss price rises could last for two years, following the recent major catastrophes, and have told their underwriters to be prepared to shrink the top-line if they cannot get the price increases they seek.

Rates-on-line for industry loss warranties (ILW’s) have increased by as much as 30% following the third-quarter catastrophe losses suffered by the industry, perhaps giving a glimpse of where retrocessional reinsurance could move at the forthcoming January renewals.

Insurance-linked securities (ILS) investors are “informed” and their lack of naivety suggests an expectation of higher rates in 2018, and many investors in the space have additional appetite despite recent catastrophe events, according to Ed Noonan, Chairman of the Board and Chief Executive Officer (CEO) of Validus Holdings.

Lutece Holdings Ltd., the insurance-linked securities (ILS) and reinsurance linked investment fund vehicle start-up, is ready to begin underwriting a collateralized retrocession product at the January 1st 2018 renewals, with “a significant amount of committed capital” raised according to its founders.

Rating agency A.M. Best believes that alternative capital will take as much as $20 billion to $25 billion of the recent catastrophe loss bill, with the majority falling to the collateralized retrocession and reinsurance market, noting that this capacity has played a vital role in helping reinsurers mitigate their net losses.