News review | December 03 2018

Italian primary insurer UnipolSai Assicurazioni has returned to the cat bond market for its first severe weather linked catastrophe bond, a €90m Atmos Re DAC transaction that seeks to provide the insurer with broad coverage for severe weather-related risks. Atmos Re DAC is a recently registered Irish domiciled special purpose vehicle, which will issue two tranches of notes to be sold to investors. The Atmos Re DAC notes will provide UnipolSai with three years of cover for perils described as "atmospheric phenomenon", snow pressure and flood.

The California State Compensation Insurance Fund has raised $210m from a renewal of its Golden State Re earthquake cat bond, coming in $15m below its $225m target. The bond covers all 48 contiguous US states, the District of Columbia, Hawaii and Alaska on a per-occurrence basis.
Trading Risk

ILS issuance volume declined 26 percent year-on-year to $5.1 billion of new risk capital issued in the second quarter of 2018, according to the latest Bermuda Insurance-Linked Securities (ILS) Market Report. This does, however, follow an exceptionally strong showing in the first quarter of the year, the report noted. In the first half of 2018 the issuance volume totalled $9.5 billion representing the second highest issuance level for the first half of any year on record.
Bermuda Monetary Authority

Property cat rates will rise in 2019 fuelled in part by a decline in confidence among some ILS investors which is having a notable impact in the retro markets, predicted a leading Bermudian cat reinsurer. “The reinsurance market will definitely harden in 2019”, declared Ryan Mather, the head of reinsurance at Bermudian carrier Ariel Re, speaking at an event in Bermuda. He described the retro market as “the tip of the spear” that has a disproportionate impact on cat reinsurers’ appetite.

Axa XL will continue de-risking its cat exposures in 2019 through increased use of ILS, selective underwriting and more reinsurance purchasing, according to Axa XL CEO Greg Hendrick. Speaking to investors in London, he committed the firm to continuing a “significant reduction” of net nat cat exposures in line with the group’s reduced cat risk appetite.

Catastrophe risk modelling could be improved by integrating the latest climate science and a variety of technologies into the modelling framework, according to the Geneva Association. A report by the insurance industry think-tank says integrating the latest climate science, earth climate system simulations and nested models within global climate models (GCMs) into cat models could be “a game changer”. It is argued this would address catastrophe risk model's reliance on historical data.
Geneva Association

Industry data provider CoreLogic has reported total losses from the wildfires in Northern and Southern California could reach from $15 billion to $19 billion. According to this new data analysis, total losses from the Camp Fire, the most destructive wildfire in the state’s history, are estimated to be between $11 billion and $13 billion. Total losses from the Woolsey Fire in Southern California are estimated to be an additional $4 billion to $6 billion.

Posted: Monday, December 17th, 2018