Trading Risk November 2017

US homeowners' insurance premiums are forecast to expand by 2 percent to $93bn in 2017, but underlying returns on equity (RoEs) from the business are still deteriorating, according to Aon Benfield

US property insurers are pushing for base case rate increases of 10-20 percent on catastrophe-exposed business, even for loss-free accounts, according to a client advisory from broker Lockton

Florida Citizens Property Insurance is expecting to take on another 100,000 to 150,000 of mostly multi-peril policies in the next couple of years following Hurricane Irma's strike on the state

The Californian wildfires could add as much as another $10bn of industry losses to the 2017 catastrophe tally, as reinsurers debated whether disclosures on third quarter events were keeping pace with expectations

Making the scale of flood exposures clear is critical to getting more risk taken up by the private insurance markets, said Willis Towers Watson's head of capital, science and policy Samantha Medlock

Market participants have said the Prudential Regulation Authority (PRA)'s guidelines on the London ILS framework are flexible enough to be workable, although some have expressed disappointment over the regulator's final stance on funding arrangements

Investors waiting to move into the ILS sector could seize their chance in the post-loss environment, but speakers at this year's Trading Risk New York Rendez-Vous questioned whether the price reaction to 2017 catastrophes would be enough to draw in more opportunistic actors

There has been a mixed reaction to third quarter catastrophe losses from Korean investors who invested in ILS for the first time this year, an analyst from South Korea's leading securities firm told Trading Risk

The legacy reinsurance market is catching the attention of ILS funds seeking additional yield and diversification, as business opportunities from insurers looking to offload older portfolios increase due to the tighter capital restrictions imposed by Solvency II

Credit Suisse US plan; Catco to raise $250mn; BlackRock targets cat bonds

Returns from a group of cat bond funds tracked by Trading Risk produced an average 3.96 percent loss in the third quarter, plunging from the Q3 2016 figure of up 2.0 percent

Cat bond rates have only increased slightly for remote risk layers following the third quarter losses from hurricanes Harvey, Irma and Maria and the Mexican earthquakes, GC Securities estimated