One of the first reinsurance sidecars, Olympus Re, is being voluntarily wound up 14 years after it was created. It suffered crippling losses and downgrades after Hurricane Katrina and was initially backed with $500m in capital from investors that included Franklin Mutual Advisors, money managers Third Avenue, hedge fund Och-Ziff Capital Management, and some executives of White Mountains Insurance Group.
January 2015 saw the third lowest average return of the ILS fund market since data from the Eurekahedge ILS Advisers Index began tracking the market. The 0.4% monthly return is also below the long-term average, of 0.69% from the last ten years, indicating that the lower reinsurance and catastrophe bond rate environment continues to depress returns, compared to previous years.
UK terrorism backstop Pool Re has purchased reinsurance in the commercial market for the first time in its history. The three-year programme provides £1.8 billion ($2.73 billion) of cover and is led by Munich Re and brokered by Guy Carpenter. It mirrors the cover currently provided to Pool Re members, including Chemical, Biological, Radioactive and Nuclear risks.
Chubb's latest East Lane Re bond has upsized by 11% to $250m as pricing settled in the middle of initial forecasts. The US primary insurer originally sought $225m for its newest catastrophe bond, which will provide it with indemnity per-occurrence reinsurance cover in the northeastern US at a higher level of expected loss than last year's transaction.
Japanese insurer Sompo Japan Nipponkoa Holdings is set to buy a 15% stake in French reinsurer SCOR in potentially its biggest investment abroad. A 15% stake would be valued at about $947m, topping Sompo's $904m purchase of Canopius Group last year.
Sandell Asset Management has launched hedge fund reinsurer Sandell Re in Bermuda. It is the most recent of a select group of participating reinsurers operating on the Multi-Strat Re platform, a Bermuda specialty reinsurer designed specifically to launch and grow sponsored reinsurers like Sandell Re. “We have been evaluating reinsurance opportunities for several years and believe this offers a unique permanent capital vehicle for the firm,” said Tom Sandell, Founder & CEO, Sandell Asset Management Corp.
Sandell Asset Management
SCOR Global Life has entered into a longevity insurance transaction with Canada's Sun Life. The transaction, which is a first in the Canadian market, covers benefits in payment for pensioners who are members of the Bell Canada pension plan. The associated liabilities are approximately CAD$5bn, which makes this transaction one of the largest pension scheme longevity insurance transactions completed globally.
SCOR Global Life
The ILS market has seen "encouraging and solid growth, despite debate and skepticism on the durability of the capital flow into the sector", said SIFMA executive vice president Randy Snook at the annual ILS conference in New York. "As we look for further growth, there is enormous potential for capital markets to bring additional capital and solutions to cover a more diverse set of risks and perils," he concluded.
A flurry of special dividends from London Market insurers shows they are not chasing potentially unprofitable business and therefore not increasing the risk of big losses that could damage their capitalisation and weaken their credit profiles, Fitch Ratings says.
Periods of relentless winter weather across the central and eastern US during February are likely to exceed $1bn in insured losses, according to Aon Benfield. The snow and ice caused major transportation disruption and business closures in major metropolitan areas including Boston and Chicago. Meanwhile in Australia, Cyclones Lam and Marcia caused over $310m of damage.
Weather extremes exacerbated by global warming have triggered severe natural catastrophes and billion-plus losses, according to Munich Re in a new report. In 2014 in North America, the cold winter caused overall losses around $4 billion and insured losses of $2.3 billion. Flooding in the UK incurred an overall loss of $1.5 billion, of which $1.1 billion was insured. The year's costliest natural catastrophe, the snow storms in Japan (overall loss of $5.9 billion, insured losses of $3.1 billion) was also attributable to the altered atmospheric circulation patterns in the northern hemisphere.
Posted: Monday, March 9th, 2015