News review | July 11 2019

The Ministry of Finance of the Government of Peru has confirmed that it is awaiting a $60m payout from the World Bank after a recent earthquake triggered its catastrophe bond protection, coverage that it said complements its national risk management policy. Peru benefits from $200m of catastrophe bond backed earthquake insurance protection on a parametric trigger basis after its participation in the record $1.36 billion Pacific Alliance cat bond issuance that covers the four countries of that trading bloc.

Artemis

The UK Government’s Department for International Development (DFID) and Global Parametrics have agreed in principal to support the world’s first pure-volcano catastrophe bond, launched by the Danish Red Cross. Global Parametrics, a parametric and index-based risk transfer start-up backed by the UK and German governments, advised the DFID’s Natural Disaster Fund (NDF) to provide some of the capital to back the cat bond.

ReinsuranceNews

Entropics Asset Management AB, the Swedish manager of a catastrophe bond fund, has formalised its focus on cat bonds as responsible investments, as it specifies investments as such in its prospectus and expects to report how cat bonds it holds contribute to the sustainable development goals. Entropics, which is the first investment manager focused on ILS to be launched in Sweden, has been following a responsible investment strategy for some time now, taking a stand on cat bond investments that are sustainable and responsible.

Trading Risk

Hamilton Re, the re/insurance platform of Bermuda-based Hamilton Insurance Group, has unveiled its first ever catastrophe bond transaction, a $60 million Cerulean Re SAC (Easton 2019-1) deal. It provides $60 m of collateralised reinsurance capacity against certain losses from US named storms and US earthquakes. 

Insurance Journal

Reinsurance companies were more discerning at the 1 June and 1 July mid-year renewals. Non-marine retrocession coverage saw the greatest price increases of up to 35% for loss-hit programs, while loss-hit Florida and US-nationwide property catastrophe and per-risk exposures saw prices rise by up to 25%. James Kent, Global CEO of Willis Re, said, “Retrocession buyers have felt the impact of the market’s changing appetite, putting the business models of some buyers under scrutiny as ILS capacity in particular has pulled back.”

Willis Towers Watson

Pool Re, the UK's terrorism backstop, has announced a new retrocession programme covering non-damage business interruption losses. The programme incepted on July 5th. The cover was placed by Guy Carpenter with Liberty Specialty Markets as the lead market. Other key partners in Pool Re’s property damage retro programme include Munich Re and AXA XL.

Pool Re

On 4 July a magnitude 6.4 earthquake struck near the town of Ridgecrest, in Kern County, California. It was the strongest earthquake in the region since the 1999 Hector Mine earthquake, and shaking from the main shock and aftershocks was felt throughout Southern California. According to the California Earthquake Association the event is "an important reminder that all of California is earthquake country". "If this earthquake had occurred under a densely populated area, it is likely that California would be looking at many more injuries and at damages in the billions of dollars," it said in a statement.

California Earthquake Authority

Posted: Monday, July 15th, 2019