Allstate has launched a seven-year Sanders Re cat bond transaction, which would be one of the longest lasting nat-cat bonds ever. The $130m US multi-peril deal will cover named storms and earthquakes, excluding Florida from the coverage zone.
State Farm’s latest catastrophe bond, the $300m Merna Re Ltd. (Series 2015-1), is set to price at the top end of initial guidance. The cat bond will provide State Farm with a fully-collateralised source of reinsurance protection on an indemnity and per-occurrence basis for New Madrid earthquake risks, one of the peak US quake risk zones.
Japanese insurer Tokio Marine & Nichido Fire Insurance is back with another catastrophe bond, Kizuna Re II Ltd (Series 2015-1), seeking a $205m (JPY25bn) source of reinsurance protection from the capital markets for Japanese earthquake risks. Last year the insurer sponsored the $245m Kizuna Re cat bond, securing the lowest spread for Japanese earthquake risk in the cat bond market's history.
Florida insurer Safepoint Insurance Company is understood to be sponsoring its first cat bond, Manatee Re. The $75m indemnity bond will cover named Florida storms and is the first Florida bond to launch ahead of the 2015 hurricane season.
The Isle of Man Insurance and Pensions Authority has launched a regulatory framework for Insurance Special Purpose Vehicles (ISPVs). ISPVs represent a new specialist class of (re)insurer for the domicile, which is designed to facilitate cat bonds, industry loss warranties and other collateralised (re)insurance transactions.
Isle of Man Insurance and Pensions Authority
The dual-listed Blue Capital Global Reinsurance Fund has reported a total net asset value return of 8.8% for 2014, including dividends paid throughout the year. This was down from an 11.8% return earned in 2013. The Montpelier Re-managed fund fell short of its long-term target of increasing NAV by 10% above Libor rates per annum.
For German reinsurer Hannover Re 2014 was a year of record results as net income rose to €985m ($1.43 billion), up from €895m ($948m) in 2013. The reinsurer noted the absence of sizeable natural catastrophe events, in particular a benign hurricane season. However, its aviation line was impacted by an "exceptional accumulation of losses". The group offset reduced shares in Europe and in catastrophe business by expanding in Asia Pacific.
While the elimination of some traditional reinsurance capacity, be it through withholding or merger, will reduce oversupply, it is unlikely to create a floor for the current pricing cycle, according to Fitch Ratings. It predicts M&A activity will continue as a result of the protracted soft market.
India's Parliament has fully opened its doors to foreign re/insurance companies for the first time after it passed the Insurance Laws (Amendment) Bill, 2015 on March 12. The Bill will further liberalise the market and allow foreign reinsurers to establish onshore branches. The move is expected to stimulate the industry and India's economy.
Economic Times of India
Last year's European winter storms were exacerbated by climate change, according to new research from the University of Oxford. It suggests greenhouse gas emissions have increased the likelihood of extreme storms by as much as 25%. "Instead of being a risk of one-in-100 of it happening in a year, it's now one-in-80," said Professor Myles Allen, leader of the Climate Prediction project. "Most impacts of climate change will be subtle changes in risk. 25% is subtle, but real."
Four years on from the Tohoku earthquake and tsunami, RMS has released a global tsunami risk study that identifies more than 20 subduction zones worldwide capable of generating a giant earthquake and tsunami of a similar scale, among them the dormant Cyprus Arc and Puerto Rico Trench. "Future mega-tsunamis should no longer be considered black swan events, as we now know where these events can occur," said RMS chief research officer Dr Robert Muir-Wood.
At the time of writing, Very Intense Tropical Cyclone Pam had intensified to a category 5 storm with gusts up to 280km/h. The storm was bearing down on the South Pacific island of Vanuatu where the capital went into lockdown as storm surges, torrential rain, flash flooding and landslides were anticipated. Port Vila, Vanuatu, was recently declared the world's most vulnerable city to natural disasters in a study by Verisk Maplecroft.
Tropical Storm Risk
Meanwhile, the loss tally from Cyclone Marcia has risen to A$403.6m ($309m), according to the Insurance Council of Australia. “These business claims are for a wide range of cyclone-related losses, from property and vehicle damage to business interruption. Many of these cases are quite complex,” said ICA CEO Rob Whelan.
Insurance Council of Australia
Posted: Monday, March 23rd, 2015