Retrocession news

Reinsurer RenaissanceRe (RenRe) has revealed that it ceded more than two-thirds of its gross losses from Q3 events to retrocessionaires and third-party investors, which includes a roughly $500 million collateralised reinsurance recovery.

According to the Insurance Council of Australia (ICA) insurance and reinsurance industry losses from Cyclone Debbie are now estimated to be nearing AU $ 1.6 billion (US $1.2 billion), with more than $1 billion of claims now paid and over 85% closed.

Lloyd’s of London focused insurer and managing agency Barbican Insurance Group is reportedly raising funds for a new collateralised reinsurance vehicle that will offer stop-loss style retrocession products to Lloyd’s syndicates, with an initial fundraise of around $200 million (£160m) mooted.

New York stock exchange listed fully collateralized reinsurer Blue Capital Reinsurance Holdings Ltd. has reported a 28.6% hit to its fully converted book value per common share after third-quarter 2017 catastrophes and hurricanes, but the manager is now hoping to position the vehicle to take advantage of higher renewal rates.

Reinsurance firms and ILS funds looking to make the most of any increase in rates at the forthcoming January renewal season are likely to make this one of the most competitive in years, which could ultimately mean that price rises are even more short-lived than currently expected.

Of the $29 billion of total retrocessional reinsurance capacity tracked by broker Aon, an estimated $9 billion, or 31% is collateralised and either completely blown or trapped as a result of recent catastrophe events, according to Robert Bisset, Chief Executive Officer (CEO) of Global Re Specialty, Aon Benfield.

Markel CATCo Investment Management Ltd., the collateralized reinsurance and retrocessional investment fund manager, has raised over $1.8 billion of new capital from investors to ensure continuity for its ceding clients and meet renewal demand for its products.

XL Catlin and its subsidiaries latest catastrophe bond, the $150m Galileo Re Ltd. (Series 2017-1) transaction, having been the first to market following the recent hurricanes is a good test of investor appetite and while investors are keen to take on more risk the coupon shows that this is not at any cost.

The entry of the capital markets and their growth into the reinsurance industry has increased the sectors “capital elasticity” resulting in a softening of the reinsurance cycle, according to global reinsurer PartnerRe.

Insurance and financial services giant Markel Corporation reported a dip in investment management fees generated by the collateralized reinsurance and retrocession linked investment activities of specialist manager Markel CATCo Investment Management, in the wake of recent catastrophe losses.