The first application for a UK insurance linked securities (ILS) transaction has been filed with the Prudential Regulation Authority on behalf of the Lloyd’s (re)insurance group Neon. Neon – ultimately owned by the American Financial Group – has applied for approval to establish an insurance special purpose vehicle (ISPV) that would securitise a circa $60m book of property cat business that could be in place in time for the 1 January renewals.
The final formalities allowing the UK's ILS regulations to pass into law are expected today, Monday 4 December. The London Market Group has welcomed parliament's decision to allow the new laws to pass. "Undoubtedly the regulations will evolve over time as the ILS market itself evolves," commented Malcolm Newman, managing director of SCOR's EMEA hub and chairman of LMG's ILS Taskforce. "The taskforce has consistently said that it seeks to grow the ILS pie... [so that] London Market players [can] generate growth via both traditional cover and new ILS solutions.”
London Market Group
A €90m transaction European windstorm catastrophe bond has been launched to the market, which will be the first time that French mutual insurance society Covéa Group has tapped the cat bond market as a source of collateralised reinsurance. The Hexagon Reinsurance cat bond will cover a range of Covéa Group insurer entities and subsidiaries against losses from European windstorms across a covered area that stretches across France, Andorra and Monaco.
Ascot Re, a new $1 billion reinsurer set up in the wake of major natural catastrophe losses in 2017, has received its Class 3B insurance licence in Bermuda. Industry veterans John Berger and Neill Currie are heading up the new entity as CEO and chairman respectively, which has been assigned a financial strength rating of A (Excellent) by AM Best. It will begin writing quota-share reinsurance for Lloyd’s Syndicate 1414 (Syndicate 1414), which is managed by Ascot Underwriting Limited, but in time broaden to write non-affiliated business, the size of which will depend on market conditions.
Bermuda-based collateralised reinsurer Blue Capital Re is anticipating that its loss hit lines of business will benefit from rate increases ranging from 15% to 25% in 2018, with other agreements expected to benefit from an estimated rate increase of 2.5% in 2018. It notes that the negative financial impact to the insurance industry from the third quarter catastrophe events is estimated to collectively be above $100 billion, which is expected to have a positive impact on the pricing of catastrophe risks during upcoming renewals.
Blue Capital Reinsurance Ltd
Markel Catco Investment Management Ltd has raised $543m of new capital from a share offering. The successful raise follows last month’s raising of $1.8 billion by the Bermudian-based company, which offers collateralised reinsurance products and invests in insurance-linked securities. Tony Belisle, chief executive of Markel Catco, said: “We are delighted with the tremendous support shown by existing and new investors for Markel Catco’s specialised ILS investment opportunity.
Chubb has announced preliminary loss estimates in the fourth quarter of 2017 attributable to natural catastrophes, including the California wildfires, of approximately $320m pre-tax, or $249m after tax. Insured losses for the California wildfires are currently estimated at approximately $280m pre-tax, or $215m after tax. These estimates are net of reinsurance, include reinstatement premiums and comprise losses generated from the company's commercial and personal property and casualty insurance businesses as well as its reinsurance operations.
Posted: Monday, December 4th, 2017