March 2011/1

Owners of Japan earthquake-exposed cat bonds with parametric triggers will have to wait at least 30 days until they learn whether their investments have been impaired by the magnitude 9 quake which struck the northeast of the country on 11 March.

Price indications on cat bonds continued to fall last week, underlining fears in the ILS sector that a portion of the $1.4bn outstanding capacity exposed to Japanese earthquake risk could be triggered by the 11 March earthquake.

Between $50mn and $100mn of Japanese earthquake industry loss warranties (ILW) traded shortly after the 11 March catastrophe that struck northeastern Japan, Trading Risk can reveal.

Munich Re placed $100mn of US and European wind cover in the cat bond market this week, just days after the 11 March Japanese earthquake and tsunami that threw the (re)insurance markets into turmoil.

A $50mn collateralised retrocession cover helped limit Bermudian (re)insurer Aspen's losses on the February New Zealand earthquake, the firm disclosed today (16 March).

Secondary market pricing on Japanese-exposed cat bonds has dived following Friday's (11 March) devastating earthquake and tsunami, although confusion still reigns over which bonds may face actual losses.

Risk and insurance management specialist Kane Group has purchased leading cat bond administrator HSBC Insurance Management (HIM) in a private equity-backed deal worth $27.5mn.

Hannover Re's $329mn K6 sidecar will cover one-third of the firm's catastrophe-related gross losses from the New Zealand earthquakes, which means it could bear a hit of up to EUR125.5mn.

Where is capital coming from in the convergence market? Trading Risk has a go at finding the source of funds...

Cat bonds did not perform as strongly last year as in the heady days of 2009, but Swiss Re said the results showed the market had fully recovered from the financial crisis.

International (re)insurers are now facing a loss bill of $12bn as the scale of the devastation in Christchurch, New Zealand became apparent last month.

Is the recent spate of costly earthquakes a deadly trend or just coincidence?