AXA has announced it will buy XL Group for $15.3 billion, to be fully paid in cash, propelling the combined entity to lead globally in P&C commercial lines insurance. The merger agreement has been unanimously approved by the boards of AXA and XL Group. "Our combined P&C Commercial lines operations, will have a strong position in the large and upper mid-market space, including in specialty lines and reinsurance," said Thomas Buberl, Chief Executive Officer of AXA.
US primary insurance company Allstate is returning for its latest catastrophe bond transaction, a $400m Sanders Re Ltd (Series 2018-1) US multi-peril deal with certain innovative features that show the insurer continues to expand its protection from the cat bond market. The deal is understood to feature an attempt to secure both per-occurrence and annual aggregate protection in a novel dual-coverage structure.
UK terrorism reinsurer Pool Re is considering sponsoring an ILS product worth at least $100m using the UK's new ILS regime, according to sources. The state-backed carrier is understood to have bought as much retro as is currently available, announcing last week it had secured £2.1 billion of coverage. It is understood to be looking at further options to achieve its objectives.
Floridian insurer Safepoint is targeting $165m from its three-year Manatee Re cat bond. This is the first Florida cat bond to come to market for 2018 ahead of the mid- year renewals. The transaction covers named storms and severe thunderstorms in an initial covered area of Florida, Louisiana and Texas for a three-year period using an indemnity, cascading per occurrence trigger.
AlphaCat Managers, a wholly owned subsidiary of Validus and Terra Brasis Re have announced the successful completion of a $5m private catastrophe bond transaction. The bond issue, named Alpha Terra Validus II, effectively renews the 2017 Terra Brasis Validus I transaction which represented a unique offering of Latin American reinsurance risk on an indemnity basis. Terra Brasis Re Rodrigo Botti noted that “ILS based solutions are gaining momentum in Latin America, with recent issuances of different size and scope."
Willis Towers Watson, a leading global advisory, broking and solutions company, has developed the Global Ecosystem Resilience Facility (GERF), the first global insurance facility of its kind to provide innovative finance and risk management solutions to build the resilience of ecosystems and the communities they support. The risk transfer element looks specifically at risk pooling, and the project finance element examines the suitability and feasibility of a variety of financial instruments including catastrophe bonds, resilience bonds, grants, and loans.
Willis Towers Watson
In his most recent letter to Berkshire Hathaway shareholders, Warren Buffett discussed why the company originally got into the insurance business and why reinsurance is particularly appealing to it. He took some comfort in knowing that the $2 billion net cost from the three hurricanes in 2017 reduced Berkshire’s GAAP net worth by less than 1 percent. He said others in the reinsurance industry suffered losses in net worth ranging from 7 percent to more than 15 percent. "This is a business in which there are no trade secrets, patents, or locational advantages. What counts are brains and capital," he said.
Reinsurers in the US recorded a combined ratio of 108.2 percent in 2017, according to the latest underwriting report by the Reinsurance Association of America (RAA). The pre-tax loss of the group included in the report was $1.12 billion. The worst hit was Everest Reinsurance Company with a pre-tax loss of $592.7m, followed by Munich Re America with a pre-tax income loss of $578.9m in 2017.
Posted: Monday, March 12th, 2018