Insurance linked securities (ILS) rates have increased by as much as 20 percent on the back of adverse 2017 loss development and this year’s hurricanes and wildfires, according to data from Lane Financial. The company’s ILS rate-on-line (RoL) index moved into positive territory during the fourth quarter of this year, with Lane suggesting a return to “hard market territory”
A private catastrophe bond, or cat bond lite, has been issued through the Kaith Re Ltd Bermuda-domiciled segregated accounts vehicle of German reinsurance firm Hannover Re, a $25m Seaside Re (Series 2019-42) transaction. The transaction, listed on the Bermuda Stock Exchange (BSX) on 2 January, follows $87m of Seaside Re private cat bonds across six transactions, issued by Kaith Re in December.
The ILS market faces a more comprehensive test in the absence of a major pricing uptick following significant loss erosion for some funds in both 2017 and 2018, according to Willis Re. Some funds are challenged in attracting new investors, and those with long-standing and successful track records, consistent and well-regarded management teams, and flexible trust language or fronting agreements are the ones best equipped for success.
Reinsurance pricing was broadly stable at the 1 January 2019 renewal, despite pressures building in the market, according to broker JLT Re. Rate increases were restricted to classes suffering sizeable losses or where performance has deteriorated. Specifically, a number of lines in the US casualty reinsurance market showed early signs of tightening as reinsurers navigated an uptick in loss ratios and an increase in the frequency of severe losses.
Latin American investment bank BTG Pactual has wrapped up the acquisition of the Bermuda based reinsurance linked investments manager Lutece Re. Financial terms of the transactions have not been disclosed. The Lutece team will be based in Bermuda.
China Re has completed the acquisition of Chaucer Holdings from The Hanover Insurance Group for $950m. Chaucer’s senior management team will continue to lead the business under the Chaucer brand.
Australian top three insurer IAG has increased its 2019 catastrophe reinsurance program by $1 billion, taking its main catastrophe cover up to $9 billion. The group said its 2019 catastrophe program was similar to previous years but with an expectation of more claims from New Zealand.
Meanwhile, Australian insurance giant Suncorp has announced that its total claims costs relating to natural hazard events over the past six months are now expected to exceed the maximum first event retention within Suncorp’s reinsurance program. Claims relating to hailstorms across the Sydney, Central Coast and South East Queensland regions in December 2018 are expected to cost A$250m.
Total economic losses from natural and man-made catastrophes in 2018 declined to $155 billion from $350 billion in 2017, according to preliminary estimates from Swiss Re sigma. Global insured losses are estimated to be around $79 billion, higher than the annual average of the previous 10 years.
AIR Worldwide estimates that the direct cyber incident losses for the Marriott breach will be between $200m and $600m. AIR's loss estimates are based on the assumption that 500 million records were stolen, as Marriott has reported.
Posted: Monday, January 7th, 2019