May 2012/1

An ILS fund is one of the partners behind Bermudian reinsurer Montpelier Re's growing stable of private sidecars, Trading Risk understands

AlphaCat, the third party funds management division of Bermudian reinsurer Validus, posted a $12.7mn profit for the first quarter as its managed gross premiums rose to $77.4mn for the period.

While assets under management in the ILS sector are likely to grow significantly the future market might not just be a bigger version of the present, said Nephila managing partner and co-founder Frank Majors.

Dexion Capital will seek to raise £100mn-£150mn from the IPO of its new London-listed ILS fund DCG Iris, the company told Trading Risk.

RenaissanceRe's weather and energy derivatives trading unit, RenRe Energy Advisors Ltd, posted a second consecutive quarterly loss after a winter that the company's chief underwriting officer Kevin O'Donnell described as "the temperature equivalent of a catastrophe".

Industry loss warranty (ILW) trading has been slow in May as the market concentrates on the key US wind-centric June and July renewals.

$30mn of hurricane options have traded on the Chicago Mercantile Exchange (CME) in the largest single order since 2009, taking the value of deals traded on the exchange this year to $45mn.

ILS traders are blaming strong primary issuance levels, seasonality and an increasingly US-wind exposed market for continued declines on the secondary cat bond market ahead of hurricane season.

The concentration of US wind risk in outstanding cat bond issuance has reached new peaks this year, causing balanced portfolio managers to seek diversifying instruments in the secondary market.

Secondary market demand for 2012 cat bonds has pushed pricing above par as cash-rich traders seek to deploy funds ahead of the wind season.

Two massive US wind deals have pushed second quarter cat bond issuance to $1.65bn, already surpassing the first quarter.

ILS fund manager Nephila Capital has bulked up its assets under management (AuM) by more than $1bn over the past year, shoring up its position at the top of the industry leader-board.