The influx of 'alternative' capital has meant a qualitative change in the way that the reinsurance market is financed. Events over the summer mean that some structures are being tested for the first time. As anticipated, the the losses have highlighted the highly skewed distribution of returns of these funds and the significant variation between individual funds.
In August, InsuranceLinked posted five charts on the state of the market. Here are five more.
1. According to Eureakahedge, Q3 2017 was the worst ever quarter for their index of the performance of insurance linked funds. Losses from the third quarter have taken the index below the level of two years ago.
2. While 2017 is likely to see more impaired cat bonds than any previous year, the total defaults are likely to be a modest proportion of the market. The Swiss Re Total Return index is now less than 5% below its peak.
3. Before the losses, the size and number of insurance-linked funds continued to grow.
4. The first bonds placed after the losses - XL Catlin's Galileo bonds - priced above recent issues.
5. Guy Carpenter's ILW trading desk has posted higher rates for their product but there has been little or no trading in the ILW market in recent weeks. As such trying to determine the impact of recent Hurricane events and associated pricing is extremely difficult and the numbers detailed below should be treated accordingly. As and when transactions are again presented to market a more accurate view surrounding year end terms and conditions will emerge.
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Posted: Monday, October 30th, 2017