Trading Risk July-August 2018

The top 10 ILS managers expanded their asset bases by just under 7 percent to $67bn in the first half of 2018.

Florida Citizens turned to the ILS market for a third of its traditional reinsurance cover for the 2018-19 programme, down from 38 percent in 2017.

Last year the hot topic was how the ILS market would respond to the challenge of reloading after the string of hurricanes. But this year, the tables have turned.

Cat bond spreads proved to be largely unaffected by last year’s catastrophe activity as sponsors topped up ILS cover in a busy second quarter that nonetheless failed to outstrip 2017’s record volumes.

The latest increase in PCS figures for hurricanes Harvey and Irma means that US wind aggregate industry loss warranties (ILWs) that trigger at $30bn have been hit, Trading Risk sources said.

The average second quarter returns for a group of ILS funds tracked by Trading Risk has increased to 1.36 percent, compared with 0.79 percent for the same quarter last year.

Stone Ridge increased its share of Swiss Re’s Sector Re sidecar in the April renewal, investing $187mn in its newest class of issuances.

M&A activity in the ILS manager market is continuing despite last year’s catastrophe activity, with one start-up being acquired by its cornerstone investor and the industry’s largest firm seeking new partners.

The carrier is now the top-ranking insurer among sidecar sponsors Liberty Mutual’s Limestone Re vehicle is now the third-largest quota-share reinsurance sidecar vehicle on the market, based on Trading Risk records, as its total capacity reached $700mn.

Wholesale broker Ryan Specialty Group (RSG) has set up a new reinsurance managing general underwriter (MGU) and a new property catastrophe facility

The Corporation of Lloyd’s crackdown on poorly performing syndicates in the wake of 2017’s market-wide £2bn ($2.7bn) pre-tax loss could open avenues for ILS players.

A dearth of underwriters able to price longevity risk in what has turned out to be a robust year for longevity swaps is stalling the UK market, according to Amy Kessler, senior vice president and head of longevity risk transfer at Prudential.

Secquaero Advisors CEO Dirk Lohmann was named the outstanding contributor of the year at the Trading Risk awards held in New York in June.

State-backed insurer Florida Citizens has borne the brunt of Irma losses, as other leading carriers in the state managed to keep their share of the event’s claims below their market share, Trading Risk analysis shows.

ILS managers were offering larger line sizes and seeking to compete more often on reinstateable layers in the Florida June renewal, Willis Re observed in its mid-year 1st View report.

Retro purchasing rose modestly at the mid-year renewals, but this did not prevent rate increases from slowing, sources said.

People moves in the ILS market