News review | February 08 2016

The US National Hurricane Center has delivered its final tropical cyclone report for hurricane Patricia, putting the minimum central pressure of the storm at 932mb at landfall on the Mexican coast. This suggests the MultiCat Mexico Ltd (Series 2012-1) Class C catastrophe bond notes face at least a 50% loss.

The UK's new flood risk pool, Flood Re, has secured a £2.1 billion multi-year reinsurance programme - with leaders Munich Re and Swiss Re contributing very significant support in the second phase. The three-year programme is one of the five largest natural peril reinsurance deals struck globally and the second biggest in Europe. Brendan McCafferty, Chief Executive of Flood Re, commented: “The reinsurance programme has been significantly oversubscribed and we are pleased by the strong demand."
Flood Re

Insurance-linked securities are here to stay according to a new report from Deloitte, with a warning for traditional players to adapt. It sees possible areas of growth outside of US perils, where the market is currently concentrated. "Earthquakes or hurricanes are not US-only events, and the expansion of ILS into these coverage areas may not only provide a societal good, but also enable ILS investors to geographically diversify their risks," it states.

US state and city pensions posted the lowest investment returns since the credit crisis, falling far short of targets the funds count on and raising the spectre of growing taxpayer contributions to keep them afloat. However, public pensions with more than $5 billion of assets invest less in US stocks and more in alternatives like private-equity and hedge funds, with a median allocation of 16.1% to alternative investments. Those retirement systems had a median return of 0.54 percent in 2015, slightly higher than the others.

Cat fund Blue Capital Re reported net income of $20.7m for 2015. The company's fully converted book value per common share was $21.41 at December 31, 2015, reflecting an 11.4% increase year-to-date, each inclusive of dividends declared in such periods, growth that was "uncorrelated to financial market volatility" according to Blue Capital Re president and CEO Adam Szakmary.
Blue Capital Re

Exor-owned reinsurer Partner Re has offered its verdict on the difficult and competitive 1 January renewals. President Emmanuel Clarke noted the firm had experienced a 5% decrease in its renewable premium base, stating: "As we expected, the January 1 renewal was characterised by further erosion of prices and terms, driven by an oversupply of capital. Given these persistent challenging operating conditions, we approached the renewal expecting a reduction in volume and capital deployed."

PERILS has disclosed its first loss estimate for the UK floods resulting from storms Eva and Frank in late December, and from further low pressure systems in early January. The initial estimate of the insured property market loss for the flood damage during the period from 25 December 2015 to 14 January 2016 is £526m ($764m).

Posted: Monday, February 8th, 2016