News review | January 08 2018

The use of PCS data in 2017 catastrophe bond issuance increased by 77% to $5.3 billion when compared with the previous year, as total issuance broke records, according to analysis from Property Claim Services (PCS), a Verisk Analytics company. Excluding cat bond lite transactions, private cat bonds, and transactions focused on lines outside property, PCS puts full-year 2017 catastrophe bond issuance at $10.5 billion, which is the first time in the market’s history the $10 billion issuance threshold has been breached in a single year.
Property Claim Services

Reinsurance giant Munich Re has sponsored a second issuance for 2018 from its latest collateralised reinsurance sidecar, with a $216.34m tranche of Series 2018-1 Class B participating notes issued by its Eden Re II sidecar vehicle, taking the total size of the 2018 issuance to $300m. This is marginally downsized from the sidecar's average of $360m over the previous three years.

The ILS market showed resilience during the catastrophe losses in the second half of 2017, comfortably weathering the first major test for a number of funds with investors prepared to recapitalise funds and provide liquidity for trapped capital, according to Willis Re. Pricing corrections at the 1 January 2018 renewals did not see a significant spike due to the combination of strong capitalisation - with the ILS market now at $75 billion - losses being split over a number of events and a large retention by the primary market.
Willis Towers Watson

Nephila Capital wrote total limit of $1bn on AIG's expanded catastrophe reinsurance programmes for 2018. AIG has moved to reverse cutbacks to its reinsurance buying in recent years by placing a new $2bn aggregate catastrophe cover. It placed a $2bn xs $2bn reinstateable occurrence cover for its US book, which was restructured from the $3bn xs $1.5bn one-shot treaty that was in place last year.
Trading Risk

JLT Re’s Risk-Adjusted Global Property-Catastrophe Reinsurance Rate-on-Line (ROL) Index rose by 4.8% at 1 January 2018, with levels still below those seen in 2016. The highest increases were recorded in the US, with rates renewing flat to up 5% for loss-free programmes and up 10% to 20% for loss-affected business. Flat to moderately up renewals were typical for international property-catastrophe business, reflecting more benign loss activity in Europe and Asia.

The hurricane trio of Harvey, Irma and Maria will cost the insurance industry a record amount in 2017: the final insurance bill for those and other natural catastrophes, including a severe earthquake in Mexico, is expected to come to $135bn – higher than ever before - according to Munich Re. Overall economic losses amounted to $330bn, the second-highest figure ever recorded for natural disasters. The only costlier year so far was 2011.
Munich Re

PERILS AG has disclosed its second loss estimate for Windstorm Xavier which affected Germany on 5 October 2017. The revised estimate of the property insurance market loss is €325m, compared to the initial loss estimate of €291m which was issued by PERILS on 16 November 2017.

Posted: Monday, January 8th, 2018