News Review | 7 October 2013

French insurer AXA made a return to the cat bond market with the launch of Calypso Capital II. The bond aims to secure AXA multi-year European windstorm coverage from the capital markets. The transaction has a preliminary size of €350m with two tranches of notes. Both tranches will be exposed to European windstorms on an industry loss basis. PERILS AG will act as the reporting agency providing a CRESTA zone and line of business weighted industry loss index. Protection from both tranches is on a per-occurrence basis. The deal covers both first and subsequent qualifying European windstorm events.

 UK regulator, the Prudential Regulation Authority (PRA), argued that there is no reason to intervene as the alternative reinsurance capital trend continues to impact insurance-linked securities. In a speech at Lloyd’s this week (when?), Julian Adams, Deputy Head of the PRA argued it is important not to overstate developments. "Some of these alternative structures have been a feature of the market for almost 20 years, so it's hardly a completely new phenomenon," Adams stated. According to him, the impact has largely been confined to North American catastrophe reinsurance.

Giant reinsurer Swiss Re is marketing a new dual-trigger contingent capital securitised bond issuance. This is the company’s second subordinated contingent write-off security for 2013, following on from a similar issuance in March. The contingent capital instrument has two triggers; if either one is met the firm would write off the full principal amount of the security, according to market sources. The hybrid form of capital protection would cover Swiss Re in the case of a decrease in solvency or an Atlantic hurricane event.

Markel Corp completed its renewal of Alterra’s New Point Re sidecar. The US insurer secured $215m of capital for the retrocession-focused sidecar. Markel and private equity partner, Stone Point Capital, sponsored New Point VI. This closed to subscriptions in early August as sufficient capital had been raised.

Willis Capital Markets & Advisory (WCMA) appointed Brad Livingston as Vice President of Insurance-Linked Securities. The broker said he will be based in New York and will help drive WCMA’s continued expansion into the ILS space, as the company continues to invest in and build its ILS practice to capitalise on growing opportunities in the sector.

Prime Management Limited, a Bermuda headquartered insurance-linked securities fund administrator, has been acquired by SS&C Technologies Holdings, Inc.
Prime is a service provider to investment structures, sponsors and managers in the ILS market. It currently provides services to 25 managers with $6bn in assets under administration. Prime’s client base ranges from emerging managers to large institutional managers.

GIC Re, the Indian national reinsurance company, announced  its decision to access ILS markets for the first time. According to a report in the Economic Times of India, GIC Re will be the first Indian company to sponsor a catastrophe bond issuance. The reinsurer says it wants to secure coverage at the attractive rates currently available. The reinsurer will seek to issue cat bonds to cover natural catastrophe risk.

Broker Willis Re estimates that recent hailstorms in Germany and France caused insured losses of up to €3.5bn. Approximately €2.5bn came from Germany and €800m from France, the broker reported. Three major storm system events caused most of the insured losses. Of nine named events associated with the three storm systems, Willis Re identified windstorm Andreas in July as the most destructive, with insured losses of between €1.5-2bn.

Tropical Storm Karen looked set to make landfall on the US’s Gulf Coast. It became the 11th named storm of the 2013 Atlantic Season and could become the second storm to make landfall on the US mainland this year after Tropical Storm Andrea. Karen is forecast to make landfall between Mobile, Alabama, and Pensacola, Florida. A hurricane watch is in effect along the northern Gulf Coast from Grand Isle, Louisiana, to Indian Pass, on Florida’s panhandle. The storm is not forecast to become a hurricane.

Typhoon Fitow is forecast to make landfall in China on 7 October. Fitow become the 21st named storm of the season on 1 October . It strengthened to a typhoon on 3 October and is expected to continue to gain wind speed before making landfall on mainland China in the vicinity of Shanghai. According to catastrophe modelers Eqecat, Fitow is not likely to make landfall on Taiwan, though it could bring heavy rain to the island as it passes.

Posted: Monday, October 7th, 2013