News review | February 05 2018

The World Bank's South American cat bond has priced just below the upper end of a revised target range at $1.36bn. The limit was expanded from an initial target of $1bn to a new range of $1.30bn to $1.39bn. The multi-national cat bond is formed of five tranches and will cover earthquakes in Chile, Colombia, Mexico and Peru, all using parametric per occurrence triggers.
Trading Risk

The first catastrophe bond covering earthquake risks from the government of Colombia is expected to be launched within a matter of weeks, as the country looks to capital market sources to improve its disaster risk transfer and financing. It’s not clear at this time whether Colombia has perhaps decided to move forwards alone with a cat bond to cover its own earthquake risks, or whether this could be the first multi-country sovereign catastrophe bond issuance in history for a number of the Pacific Alliance members.

Aon Securities has revealed that during 2017, 35 catastrophe bonds were issued by 31 different sponsors, representing a combined total capacity of $10.7 billion and a new record in the ILS marketplace. The previous annual issuance record of $8.38 billion, established in 2007, had already been surpassed by the end of June.
Aon Securities

LGT Capital has opened its ILS fund to a wider investor base. The LGT Select Cat Bond fund was officially launched in December 2013 and was made available to investors on the 1 December 2017.
City Wire Selector

Scottish Widows has reinsured the longevity risk for around £1.3bn of its bulk annuity liabilities with The Prudential Insurance Company of America (PICA). The agreement represents the pension provider's first longevity reinsurance transaction with PICA, a division of Prudential Financial.
Professional Pensions

Nephila has launched a new specialty division, Nephila Climate (NCx), dedicated to weather risk transfer and climate resilience products. "NCx stands at the intersection of two trends: steadily increasing interest in weather risk transfer alternatives from companies and intermediaries around the world, and the investment community's collective push to develop products aligned with impact and sustainable investing goals", said NCx CEO Dr Richard Oduntan. "NCx will also satisfy a growing demand from investors for additional non-correlated returns."

2018 is set to be another year of growth for insurance linked securities as the market recovers from recent natural disasters, replaces lost capital and investors show mounting interest in ILS products, according to Willis Towers Watson Securities. “2018 is shaping up as a brutal battle for market share between, on the one hand, incumbent reinsurers and ILS investors trying to both maintain their positions and exact some rate increases and, on the other hand, other ILS investors and reinsurers trying to stake a claim to participate in additional risk,” said Bill Dubinsky, managing director and head of ILS at WTWS.
Willis Towers Watson Securities

Casualty catastrophe modelling company Praedicat has raised $6m to fund the development of its latency catastrophe models for a wider set of emerging risks and business activities. "Our quantitative models will be used to inform insurance and reinsurance transactions," said Jacques Dubois, Praedicat chair. "Not only can Praedicat's data analytics help insurers grow their casualty business, they will assist insurers in demonstrating to ratings agencies and regulators that they have a thorough understanding of their casualty aggregations."

Posted: Monday, February 5th, 2018