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Analysis

  • Indicative reinsurer sidecar returns for 2016 have dropped into the single-digit range, highlighting the impact of catastrophe losses recorded earlier this year
  • Equity analysts suggested that reinsurers were being optimistic in talking up the prospect of the market finding a pricing floor in 2017, as they warned carriers might have to wait another year for flat renewals
  • Reinsurers sought to declare that the market was nearing a pricing floor as the Monte Carlo Rendez-Vous kicked off the traditional lead-up to the January renewal season
  • Recent research has overturned the traditional assumption that there is no correlation between earthquake risk along the northern and southern parts of the San Andreas Fault in California
  • The (re)insurance industry faces disruption and disintermediation as a result of new technologies, reinsurers warned at the Monte Carlo Rendez-Vous last month
  • The varied, international nature of second quarter catastrophe events has made reinsurer sidecars the most likely source of losses for the ILS market, as the vehicles help to keep the earnings hit for carriers to a manageable level.
  • Second quarter catastrophe losses had a patchy impact on reinsurers' fee income from managed capital.
  • Weather risk has come back into the ILS spotlight with the launch of a Market Re private cat bond that uses a parametric trigger to cover a warm European winter event.
  • Reinsurer sidecars delivered average increases in fair value of 1.95 percent for the three months from February to April, down from a 2.5 percent average return posted in the same period last year, according to Trading Risk calculations.
  • News that Gator Re is almost 70 percent of the way to reaching its trigger point has put aggregate modelling back in the spotlight.
  • Brexit market volatility could give a minor boost of $1bn-$2bn to investor inflows into the ILS market, Fermat Capital Management co-founder John Seo said.
  • Changes to AM Best's Capital Adequacy Ratio (BCAR) methodology could provide an impetus for US catastrophe-exposed carriers to seek additional tail risk and second-event reinsurance.