Swiss Re Capital Markets structured and placed the issuance of $350m of insurance-linked securities by Frontline Re Ltd on behalf of Frontline Insurance in its debut catastrophe bond. The issuance, which covers named storms in Alabama, Florida, North Carolina and South Carolina, is the largest cat bond sponsored by a Florida-based (non-government entity) insurance company.
Swiss Re Capital Markets
AXIS Capital Holdings is set to secure an upsized $200m of coverage from its new Northshore Re II Ltd (Series 2018-1) catastrophe bond, while at the same time the pricing has now been fixed below the bottom end of the initial range. This third cat bond from AXIS Capital sees the company seeking four years of coverage to provide it with collateralised reinsurance and retrocession protection against losses from US & Puerto Rico named storms, US & Canada earthquakes and European windstorm catastrophe events.
Twelve Capital has returned to the cat bond lite market with its 18thDodeka issuance. Twelve Capital has issued a $9.6m Dodeka XVI cat bond lite, which has a six month risk period maturing 27 December. This is Twelve Capital’s 18th issuance and is the third Dodeka cat bond lite to be issued this year.
ACORD, Aon, and Beazley have unveiled the industry’s first standard for global cyber data breach. As organisations continue to be impacted by cyber-related losses, demand for coverage is steadily growing. This increasing demand is driving the need for streamlined, standardized cyber risk data exchange.
Global insurance premiums increased 1.5% in real terms to nearly $5 trillion in 2017, after rising 2.2% in 2016, according to Swiss Re sigma. Global non-life premiums rose 2.8% with emerging markets, especially China, continuing to drive growth. The Swiss Re Institute expects global non-life premiums to rise, led by the US, where the economy is strengthening.
Swiss Re sigma
Reinsurance is used increasingly for earnings protection and volatility reduction by insurers whose purchasing is guided by “risk appetite statements” deployed to optimise capital management and profitability targets. Eighty percent of insurers consider their risk appetite statements when defining their reinsurance strategies, according to research by Willis Towers Watson.
Willis Towers Watson
The North Atlantic hurricane season has got underway with Beryl and Chris the first two storms of the year to reach hurricane strength. Beryl, which had been downgraded to a tropical storm at the time of writing was tracking in a northwesterly direction towards the Caribbean while Chris was anticipated to take a north east direction, moving up the mid Atlantic as it tracked the eastern seaboard and intensify to a category 1 hurricane.
Tropical Storm Risk
Florida insurers have increased their projected Hurricane Irma losses by 10-20 percent on average in recent months, as the costs of repairing roof damage has surged. Reinsurers will bear the brunt of this deterioration but how far individual carriers will be affected by this loss creep will depend on how much of a buffer they had built into reserves initially. Florida is notorious for high levels of insurance litigation so it is likely that reinsurers built in a good level of conservatism to their initial reserves.
Record rainfall has caused flooding and landslides in western Japan, killing at least 100 people. Following a typhoon, parts of western Japan received three times the usual rainfall for the whole of July in just a matter of days. Two million people were ordered to evacuate as rivers burst their banks. Many buildings have collapsed and vast areas have been covered in debris and thick mud.
Posted: Monday, July 16th, 2018