News review | August 07 2017

Markel Corporation is set to buy State National for $919m and says the fronting company’s two core businesses, Program Services and Lender Services, are well positioned to “capitalise on changing market dynamics and new opportunities”. Richard Whitt, Markel's Co-CEO said, "Strategically, State National will help us to leverage our Insurtech and digital distribution initiatives, diversify our underwriting and fee-based portfolios and revenue streams, and add to Markel's third party capital capabilities.”
Markel Corporation

Fast-growing Gibraltar licensed online lottery provider the Lottoland Group has renewed its Fortuna ILS transaction at an upsized €120m, increasing the size of its capital markets-backed jackpot insurance coverage. Lottoland has placed collateralised reinsurance structures and the ILS market at the heart of its expansion, leveraging the capital markets-backed risk transfer capacity in a series of deals dubbed Fortuna as jackpot payout security and helping the firm to grow.

Non-life insurance-linked securities (ILS) issuance reached a record breaking $6.3 billion in Q2 2017, continuing the trend from the first quarter of the year, according to a report from Willis Towers Watson Securities. ILS assets under management (AUM) also continue to grow alongside fierce competition from investors. Q2’s record issuance volume was driven by two of the largest ever catastrophe bond transactions, Kilimanjaro II Re 2017-1 and Ursa Re 2017-1. The ILS market has reached “a positive tipping point” as it manages a larger share of the world’s peak cat risk, says WTW Securities.
Willis Towers Watson Securities

Arch Capital has expanded the amount of ILS capital it manages to $500m this year. This was up from $240m and is understood to largely relate to bilateral relationships in which the carrier deploys capital in the catastrophe business. Meanwhile, Arch has also outlined plans to make the Bellemeade Re ILS transactions a regular feature of the reinsurance arrangements for its mortgage insurance book.
Trading Risk

In its half year results, Swiss Re revealed its treaty premium volume for the July renewals decreased by 10% and the year-to-date volume declined by 13%, as the reinsurer continued to withdraw capital where business was deemed to be unprofitable. “While in the short term... the pricing pressures are concerning and are being addressed, we are steering our company with long-term value creation in mind,” said Swiss Re Group CEO Christian Mumenthaler.
Swiss Re

PCS Turkey has designated its first two natural catastrophe events – both major storms. The events caused widespread wind, hail and flood damage to properties and motor vehicles. “Severe hail may be rare, but as we saw over the weekend, it’s possible,” said Menekse Ucaroglu, general manager, Istanbul Underwriting Center. “Both recent events are certainly relevant to insurers in Turkey and reinsurers worldwide.”
Insurance Insider

The California Earthquake Authority (CEA) ended its second quarter of 2017 with more than 950,000 policies in force—continuing a trend of increased earthquake insurance sales that began in 2016. In 2016, CEA saw a significant net gain of more than 52,000 policies in force—more than seven times CEA’s average gain of about 7,200 annually in the past 10 years. “Californians are listening to what the scientific community is telling us—that we are overdue for a large earthquake, and we need to be ready when it strikes,” said CEA CEO Glenn Pomeroy.
California Earthquake Authority

Posted: Monday, August 14th, 2017