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Analysis

  • Private cat bond placements have become increasingly common in recent years, but the popularity of these somewhat opaque transactions has been coupled with concerns over their impact on the market's liquidity.
  • Some UK pension funds are delaying making decisions on longevity swaps because of a recent increase in pensioner mortality rates, sources have told Trading Risk
  • An update to RMS's medium-term hurricane model will result in 8-10 percent reductions to projected annual average losses from US hurricanes for the typical cat bond market risk level of 1-in-100- or 250-year return periods
  • Annualised sidecar returns dropped to the low teens towards the end of 2016, as the softening market and catastrophe losses took a toll on performance.
  • Alternative market reinsurance capital intakes slowed in 2016, but the sector's rate of growth still outpaced the traditional market, brokers estimated in their reports on the 1 January renewals.
  • Retrocession and US property catastrophe rates moved closer to flattening out at the 1 January renewals.
  • Sensitivity-case hurricane risk modelling has become the ILS market's standard currency, but would shifting to the base-case scenarios provide greater stability for investors and underwriters?
  • A new regulatory landscape and M&A activity created opportunities for the life sector in 2016, as more companies looked to the ILS sector to transfer risk.
  • It has been a sponsors' market in 2016, with undersupply meaning reinsurers have been able to exceed target sizes and secure favourable pricing.
  • 2016 has been a year of diverging strategies for ILS fund managers, with some chasing expansion in specialty reinsurance and others focusing on branching out into new spheres of catastrophe exposure.
  • Despite initial fears that Hurricane Matthew could take a significant toll on the Florida (re)insurance market, a shift in the storm's track as it approached the US coastline in early October has limited forecast industry loss levels to the low single-digit billions.
  • Third quarter returns from a group of ILS funds tracked by Trading Risk were stable year-on-year.