News review | August 27 2018

The California Earthquake Authority, the not-for-profit residential earthquake insurance provider, is returning to the capital markets for another slice of reinsurance protection with a new Ursa Re Ltd. (Series 2018-1) catastrophe bond that targets up to $250m of coverage. This is the CEA’s sixth Ursa Re Ltd. catastrophe bond issuance, with these transactions now playing an increasingly important piece of the insurers growing reinsurance protection.

Arch Capital Group garnered significantly more capital market investor support for its latest and largest mortgage ILS transaction, with 26 investors backing its $653.3m slice of collateralised mortgage reinsurance from the Bellemeade Re 2018-2 Ltd. transaction. Including the new transaction, Arch Capital now has approximately $2 billion of reinsurance coverage from the capital markets via its five mortgage ILS transactions.
Arch Capital Group

Twelve Capital has issued a $18.32m cat bond lite on the Bermuda Stock Exchange (BSX). The Dodeka XVII is Twelve’s 19th Dodeka issuance, and is due on 27 December 2018. It is the fourth Dodeka cat bond to be launched this year, following the $9.60m Dodeka XVI issued in July, the $9.27m Dodeka XV issued in June and the $23.57m Dodeka XIII issued in May. The issuance brings the cat bond lite total up to $826.48m for 2018.
Trading Risk

The Hartford has signed an agreement to acquire specialty underwriter, The Navigators Group, for $2.1 billion in cash. The transaction has been approved by the boards of directors of both companies and is subject to approval by Navigators’ shareholders and other customary closing conditions, including regulatory approvals. It is expected to close in the first half of 2019.
The Hartford

Catastrophe bond issuance in the second quarter of 2018 totalled over $4 billion, representing the third largest Q2 issuance total in history. Given the 2017 US wind loss events, this strong result evidences the continued utility of catastrophe bonds for sponsors and investors alike, and demonstrates the continued robustness of the ILS sector, according to Aon Securities. Q2 2018 comprised a record volume of maturating bonds, with nearly $3 billion of limit coming off-risk; however, this capital was entirely replaced, and even expanded through $1 billion of new issuance volume.
Aon Benfield

Hurricane Lane has lost some of its punch as it prepares to brush past Hawaii but still threatens to inflict “tens of millions of dollars” in damages on the islands. According to data analysis from CoreLogic®, 48,617 homes in Hawaii with a total reconstruction cost value of approximately $8 billion are at extreme-to-very high risk of hurricane-driven flood damage from Hurricane Lane.

AIR Worldwide estimates that industry insured losses from the flooding in western Japan caused by excessive rainfall from June 28 to July 8, 2018, will be between $2.6 billion and $4 billion. In addition to major damage to buildings and infrastructure, there was considerable business interruption.
AIR Worldwide

According to Swiss Re Institute's preliminary sigma estimates, global economic losses from natural catastrophes and man-made disasters in the first half of 2018 were $36 billion. This figure is well below the ten-year average of $125 billion in economic losses and significantly lower than the losses reported for the same period a year earlier.
Swiss Re sigma

Posted: Monday, September 10th, 2018