All of our news and analysis on the retrocessional reinsurance marketplace.
Retrocession is effectively reinsurance for reinsurers, so a tertiary layer of risk transfer away from the original risk, if you consider primary, reinsurance and then retrocession.
As reinsurance is insurance for insurers, retrocessional, or retro, protection is reinsurance for reinsurers.
The retrocession reinsurance market has increasingly come to depend on the capital markets and insurance-linked securities (ILS).
As of mid-year 2022, global retrocession capacity has been estimated to be as high as $60bn, around $20bn of which is indemnity based and the rest in other formats.
The alternative capital markets and ILS funds, or investors, play a significant role in global retrocession, as too do instruments such as catastrophe bonds and industry-loss warranties (ILW).
Despite the significant catastrophe losses facing the reinsurance industry, French reinsurer SCOR has reported a profit for the first none months of 2017, as support from its retrocession providers helped the firm to better manage its losses.
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XL Catlin and its subsidiaries are the first sponsor to return to the catastrophe bond market after the recent hurricane losses, according to sources, launching a $150 million Galileo Re Ltd. (Series 2017-1) transaction with pricing that looks a little higher than other recent similar multi-peril cat bond issues.
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Reinsurance and retrocessional reinsurance investment manager Markel CATCo Investment Management has implemented loss reserves for hurricanes Harvey, Irma and Maria amounting to 20% of net asset value for its listed retrocession strategy, the CATCo Reinsurance Opportunities Fund Ltd.
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The third of the Bermudian insurance and reinsurance firms to announce its third-quarter catastrophe losses yesterday was Arch Capital Group Ltd., which said that it expects to suffer up to $345 million of impact from hurricanes Harvey, Irma and Maria, the Mexican earthquakes and other Q3 events around the globe.
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The retrocession market has helped Bermudian re/insurer AXIS Capital to reduce its losses from third-quarter catastrophe events, including hurricanes Harvey, Irma and Maria, as well as the Mexico earthquakes, to $578 million, with the firm set to claim $136 million back from retrocessionaires.
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Catastrophe risk modelling firm Karen Clark & Company has estimated that the insurance and reinsurance industry could face a $500 million industry loss from hurricane Nate’s weekend impacts.
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Reinsurance company SCOR has announced that it expects its net losses from recent catastrophes will total EUR 430 million, after tax and retrocession, and that it sees the chances of its contingent capital facility being triggered as “extremely remote.”
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Hurricane Nate made landfall on the U.S. Gulf Coast as a Category 1 storm with sustained winds of around 85 mph over the weekend, which has the potential to exacerbate losses for some insurance and reinsurance firms, but overall is expected to be a relatively small event, compared to other recent hurricanes.
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The fact that insurance-linked securities (ILS) such as catastrophe bonds and collateralized reinsurance arrangements generally do not feature reinstatement provisions, means interest in industry loss warrants (ILW’s) could remain higher through the end of this year.
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Reinsurance and retrocessional reinsurance investment manager Markel CATCo Investment Management has announced this morning its intention to raise funds, to take advantage of pricing opportunities being seen in the retrocessional reinsurance market and its requirement for new capital.
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