Trading Risk November 2018
A year on from the “great ILS reload” of 2017, there are signs that the market’s capacity could be static or even lower as 2019 begins.
ILS Capital Management has taken a minority stake in US insurer Producers National, the firm told Trading Risk.
Last year’s catastrophe losses were exactly the kind of disaster event that made it easy for ILS managers and reinsurers to pitch to investors for fresh capital and to succeed in delivering the “great ILS reload” at the year-end of 2017.
Bermuda regulators are looking to firm up wordings in the island’s ILS regulations to clarify how liabilities apply during the transition at annual renewals, and whether vehicles can offer collateral clawbacks.
Hurricane Michael is likely to have triggered Floridian window industry loss warranties (ILWs), sources told Trading Risk. The window covers typically attach at ranges between $2bn-10bn and $7bn-15bn, covering Florida wind risks only.
Third quarter cat bond issuances increase.
More than a dozen Lloyd’s syndicates have pulled back from property direct and facultative (D&F) business either in full or by significantly cutting portfolios, sister publication The Insurance Insider has reported.
Ultra-high-net-worth investors have seeded the launch of Cayman Islands start-up reinsurer Topsail Re, sister publication The Insurance Insider reported.
Reinsurance brokers need to cut costs if they are to survive being disintermediated, industry veteran Ted Blanch told Trading Risk.
The new IFRS 17 accounting standard, which will be mandatory from January 2021, could lead to ILS opportunities in the life sector from as early as the middle of next year, sources said.
Third-quarter catastrophe losses resulted in a 1.8 percent to 5.2 percent hit to the shareholder equity of global reinsurers, with major catastrophe writers all impacted.
Two M&A deals in the ILS sector in the past month provide a contrasting view on what kind of acquirers may step forward in the future.
Tokio Millennium Re’s agreed sale to RenaissanceRe will open up an opportunity for competitors to enter the fronting market.
Florida insurers reported manageable catastrophe losses in the third quarter. However, Irma loss creep continued to mount for some, as questions arose over potential coverage gaps following collateral release.
US homeowners’ insurance business is likely to deliver an after-tax return on equity (RoE) of 5.5 percent in 2018, up from an estimated 4.5 percent in 2017, according to an Aon Reinsurance Solutions report.
Reinsurance market sources expected Hurricane Michael to cause insured industry losses of $10bn, but the limited number of public loss estimates released to date suggest Florida insurers are hoping it will remain below this level.
Insurers and reinsurers of the future will have more of a focus on packaging and ceding out risk, but there may be cultural challenges to reaching that goal, according to speakers at the Trading Risk New York Rendez-Vous.
ILS market participants said there are various ways to manage loss creep in a collateralised reinsurance framework.
The ILS market must focus on more disciplined underwriting as the reinsurance pricing cycle has been muted, according to Bobbi Anderson, principal and general counsel of Elementum Advisors.
Only around three or four reinsurers are managing true asset management platforms, Hiscox Re & ILS chief operating officer Richard Lowther said at the Trading Risk New York Rendez-Vous.
AIR’s Brent Poliquin says ILS model users are getting to grips with more detail.
People moves in the ILS market, November 2018