Trading Risk September 2018

Three ILS funds have joined the Florida Hurricane Catastrophe Fund (FHCF) programme this year, using Tokio Millennium Re as a fronting partner.

California has suffered another record-breaking wildfire season but the impact on the ILS market is likely to be marginal, sources have said.

The omega ratio may provide a better view of risk-weighted returns within the ILS asset class, given the rare chance of a hefty loss, than other statistical benchmarks, commentators have suggested.

Securis Investment Partners has hired Paul Wilson from RMS and Adam Tidball from MS Amlin to lead its non-life catastrophe analytics team.

Lloyd’s is still in talks with ILS investors over a deal to cover the Central Fund, although there is uncertainty in the marketplace that an agreement will be struck in time for the 1 January renewal.

Almost 30 percent of the ILS funds tracked by the Eurekahedge ILS Advisers index recorded losses in the first half of 2018, with an average loss among this group of 2.82 percent, the index providers told Trading Risk.

A growing focus on climate change, as well as the increasing breadth of the ILS market, means that investors are considering the argument for ILS as an ESG investment, as well as a diversifier.

If you rewind to Monte Carlo a decade ago, Nephila and other ILS managers were merely an exotic corner of the reinsurance markets – independent, small teams slugging away at building up franchises. Ten years on and the industry’s largest manager has just sold up to Markel in a landmark M&A deal, and the ILS top 10 have boomed from under $10bn to $68bn in size.

The 2017 cat losses are set to diminish the financial crisis’ historical ILS impact.

As the challenging operating market leads more and more reinsurers to raise third-party capital, it seems strategic benefits might be easier to come by than financial benefits, commentators have suggested.

Chaucer may be the first of a number of Lloyd’s and London market insurers that are up for sale to change hands, sister publication The Insurance Insider has reported.

Hurricane Lane, which hit Hawaii earlier this month, is set to be more of a flood event than a wind event for insurers, rating agency AM Best has said.