The alternative twelve days of Christmas

A seasonal round-up of the big stories of 2015. Happy holidays.


On the twelfth day of Christmas, my true love sent to me...

Twelve tropical depressions

As predicted by Tim Hall and others, Atlantic storm activity was slightly below the long term average. None of the storms were sufficiently bad to affect the reinsurance market. The relatively low level of property damage included over $500m of damage from Erika in Dominica, and $60m of damage from Joaquin in the Bahamas and Bermuda.

The twelve were: Hurricanes Danny, Fred, Joaquin and Kate; Tropical Storms Ana, Bill, Claudette,  Erika,  Grace, Henri, and Ida plus Tropical Depression Nine.

On the Pacific coast, Hurricane Patricia broke several records and is likely lead to the only catastrophe bond default in 2015.

rol-index-2-1990-2015jan1Eleven percent rate reductions

Guy Carpenter's benchmark index showed that global catastrophe reinsurance rates had fallen by 11.2% by the middle of the year. Rate reductions seem to have continued for the January 1 2016 renewals though some parts of the market are showing resistance.

Ten fund startups

There was no shortage of new (re)insurance funds in 2015. Hudson, Entropics, Sequant, Redmond and Lombard Odier were all looking for investors who are attracted to the insurance industry's return characteristics, while Enstar/UBS O'Connor, ACE/Blackrock, XL Catlin/Oaktree, Axis/Blackstone and Aspen/Goldman explored ways to create investment vehicles that combine insurance cash flows with investment returns.

Nine mergers and acquisitions 

One effect of current market conditions has been a glut of M&A activity, including: Renaissance/Platinum, Mitsui/Amlin, Exor/Partner, XL/Catlin, Endurance/Montpelier, Fairfax/Brit, China Minsheng/Sirius, ACE/Chubb and Markel/CATCo.

Eight percent AUM growth

The AUM of the largest asset managers tracked by InsuranceLinked grew by a little under 8.5% to $49 billion in the 12 months to June 30 2015. This compares to an average of 35% per year since the beginning of 2010. Sirius, Third Point and AQR exited the reinsurance fund business while others grew significantly. Access to retail/high net worth investors continued to be a theme amongst the fastest growing funds.

Seven billion dollars of new cat bonds

Catastrophe bond issuance is already over $7 billion in 2015 and could end the year closer to $8 billion. This is about the same level as in 2013 but considerably below last year's $8.9 billion of new issues.

Six major conferences

A sign of the increased interest in the sector is the increasing number of ILS conferences each year. Key events this year included: Convergence 2015 (Bermuda) - link to live blog, SIFMA (New York), Rendez Vous (Monte Carlo), ILS and Cat Bonds Australasia (Sydney), Trading Risk (New York) and PCI (Hollywood, Florida)

Many other reinsurance and investor events attracted significant interest from the alternative reinsurance industry including Reinsurance Meeting (Baden Baden), NAMIC (San Diego) and RIMS (New Orleans).

Five thousand users

InsuranceLinked had close to 5,000 users in October and November 2015. There were 64% more users in the 12 months ending November 30 2015 than in the same period the year before. We appreciate your support. Advertisers can contact for information about marketing opportunities.

Four percent returns

According to the Swiss Re Global Cat Bond Performance Index, cat bonds returned 4.2% in the 12 months to December 18. This compares to 6.0% in 2014 and 10.9% in 2013. This includes the market's view of the fate of MultiCat Mexico C (a total default would impair the market by less than 0.5%).

The weaker euro meant that the unhedged version of the index returned 3.4% in the 12 months to December 18 (compared to 4.4% in 2014 and 11.5% in 2015).

Three rated vehicles

The new world is embracing the old with 'alternative' reinsurers making increased use of 'traditional' structures. Credit Suisse launched Humbolt Re a CHF500m, 'A-' rated carrier. Credit Suisse also launched a Lloyd's vehicle (Arcus Syndicate 1856) as did Securis (SPS 6129 with Novae).

Two fronting carriers

Pressure to expand from reinsurance into insurance has prompted the creation of Clear Blue and Spinnaker. Both were successful in gaining AM Best 'A-' ratings. Nephila too found new ways to access insurance business with the creation of an MGA called 'Velocity Risk Underwriters'.

And a big new reinsurance company

The challenging market didn't stop Fidelis completing one of the industry's largest ever fundraises to create a new, $1.5 billion, 'A-' rated reinsurance company.

Posted: Monday, December 21st, 2015