November 2013/1

The ILS market has turned away from investment risk since the 2008 financial crisis. However, the deadlock over the US government debt limit in October has raised the issue of collateral risk in cat bonds again, as two Munich Re cat bonds suffered small collateral losses this month.

The secondary cat bond market has seen relatively active trading levels over the past month, with ILS investors looking to trade short-dated bonds that come off risk this month, Trading Risk understands.

Premiums on diversifying cat bonds dropped significantly in the third quarter of 2013, according to the latest rate-on-line (RoL) data from Willis Capital Markets & Advisory.

Just a single cat bond has come to market and closed over the past month, but strong demand for Galileo Re's "clean structure" led Catlin to almost double its target cover for the bond.

Leading ILS fund manager Nephila Capital offered a $1bn reinsurance cover to the Florida Hurricane Catastrophe Fund (FHCF) this year, Trading Risk has learned.

After Monte Carlo, Baden-Baden, Trading Risk New York and this month's ILS gathering in Bermuda, the autumn 2013 conference season will be almost at an end, but have all the talk-fests got the sector any closer to knowing what will happen at the 1 January renewals and the mid-year 2014 renewals?

AQR Re has raised $150mn for a new higher risk-return strategy that will be deployed in 2014 and include a substantial focus on retrocession products.

Scor is seeking to establish a $60mn sidecar as part of its 2014 retrocession protection, building on its strategy to seek greater quota-share cover, Trading Risk can reveal.