Willis Towers Watson has tipped that greater focus will be drawn to ILS domiciles and structures in 2020 amid an “unusual amount of innovation” from existing and emerging jurisdictions.
The deal points to a significant price correction in the cat bond market since 2018, with projected spreads up more than 20 percent when compared with past deals.
It will be many months before the $11bn payout agreed between Pacific Gas and Electric Company (PG&E) filters through to the (re)insurance and ILS markets, with this lump sum likely to benefit some parties more than others.
Panellists at Trading Risk’s conference in New York said they were adopting a wait-and-see approach to Lloyd’s Blueprint One proposals intended to make it easier for ILS managers to participate in the market.
Access to risk has been the biggest driver of M&A deals for independent ILS funds, TigerRisk Capital Markets & Advisory co-CEO Jarad Madea said at Trading Risk’s conference in New York last month.
Benjamin Franklin apparently once said that ‘nothing in life is certain except death and taxes’ – and it seems like the adage resonated with the risk modellers of the (re)insurance industry.
Broader risks could entice new investors to the ILS space, Dan Brookman head of alternative capital at Axa XL said at Trading Risk’s conference in New York earlier this month.
The EUR45mn ($49.50mn) Atmos Re I cat bond from Unipol is likely to lose nearly 50 percent due to severe weather events in Italy, according to sources.
The ILS market’s shift toward lower-attaching risk in the past decade meant it had much higher exposures to the 2017/18 losses than to the last active hurricane season in 2004/05.
Non-life insurers in Japan are anticipating a 300bn yen ($2.8bn) loss from Typhoon Faxai, the chairman of the General Insurance Association of Japan has said.
Cat bond pricing volatility in the first half of the year meant that some cedants didn’t want to risk entering the market, the Willis executive told Trading Risk.
Pricing has not increased to levels that compensate for the volatility in the sector in the past couple of years, the investor said in an earnings call.
The UK regulator has said that it is happy to discuss proposals with applicants who think their structures meet the principals of being ‘fully funded’.
Typhoon Jebi creep continued to have an impact on performance, with multi-instrument ILS funds reporting an average loss of -0.78 percent for the quarter.
Barry could go on to produce storm surge and tropical storm or hurricane force winds across parts of Louisiana, Mississippi and upper Texas coasts, the NHC said.
Ten months on from Typhoon Jebi, there is still considerable uncertainty around why the storm’s insured losses are expected to be so much higher than the initial modelled figures.
The Colorado State University meteorologists are now predicting an average storm season, revising their earlier expectation for slightly below normal activity.
Insurers are looking to line up private deals as a stalemate emerges over early firm-order terms averaging risk-adjusted increases of 15-20 percent year on year.
Issuances from United Insurance Holdings, American Integrity Insurance Company and Safepoint have all reflected an uptick in pricing compared with prior-year benchmarks.
Insurers are looking to keep overall risk-adjusted rate increases to around 15-20 percent, lower than reinsurer expectations but still reversing several years of declining yields.
UPC Insurance halved the amount of reinsurance limit it will seek from the open market to $808mn, after opting for more state fund and quota share cover.
A digital approach to defining investor appetite and return expectations is one way Lloyd’s could benefit the ILS market in the future, John Neal said at the market’s prospectus launch today.
This is the platform’s first deal to be issued since Rewire Securities, which brokered the previous Eclipse deals, stopped functioning as an independent broker-dealer.
Two tranches of Heritage’s Citrus notes traded at 4.5 cents despite the latest loss reports from the company implying both bonds still have at least 30 percent capacity left.
Cat bond investors are being more careful in assessing where to put their funds after recent losses, Aon Securities CEO Paul Schultz said at Trading Risk’s ILS conference in London this month.
A tighter cat bond market persisted into the first quarter of 2019, with new issuance activity expected to remain subdued heading into the hurricane season.
Catastrophe insurer Palomar Specialty Insurance Company is offering a total of 6.47mn shares, with an initial public offering price expected of between $15.00 and $17.00 per share.
Ontario Teachers’ kept its C$150mn ($85.60mn)-plus investments in DaVinci Re, the Hudson Catastrophe Fund and Kyobo last year as it cut capacity for 2019.