Markel has announced it will acquire ILS fund giant Nephila to create an entity with combined assets under management of $19 billion, representing 20% of the ILS sector. Frank Majors, Nephila's Co-CEO, said, "Markel shares our strategic vision for the future of the insurance markets; this transaction will allow us to accelerate our delivery of that strategy, creating additional value for our investors and our trading partners. We are looking forward to working with the Markel team, and are excited by the possibilities from our combined strengths."
Citrus Re cat bond losses have more than doubled since May amid rising claims from Hurricane Irma, with the total $324m payout expected to flow to Heritage set to be a new record for the ILS market. The combined Citrus losses from Irma are now expected to surpass the previous largest payout from a single bond, the $300m Muteki loss that benefited Zenkyoren following the 2011 Japanese earthquake.
Pricing has tightened for the new Ursa Re catastrophe bond that is being currently marketed on behalf of the California Earthquake Authority (CEA). At the moment looks like it will settle close to or just below the initial guidance mid-point. CEA launched its sixth Ursa Re Ltd catastrophe bond just over a fortnight ago, targeting up to $250m of collateralised reinsurance coverage from the issuance.
As at June 30 2018, the amount of alternative capital in the re/insurance sector stood at a record $98 billion, while catastrophe bond limit on-risk had reached $30 billion – an increase of $4.2 billion from the prior year period, and a new record for the sector, according to Aon Securities. During the 12 months under review, the Aon All Bond Index and US Hurricane Bond Index achieved returns of 2.72 percent and -1.13 percent respectively, with the Aon All Bond Index outperforming all comparable fixed income benchmarks, but underperforming the 12.17 percent return of the S&P 500 index.
Shareholders’ equity in 34 reinsurance companies tracked in the Willis Reinsurance Index totalled $364.9 billion, a 1.6% decrease from $371 billion at year-end 2017. The decrease occurred despite an improvement in net income of nearly 75% to $14.5 billion, largely due to lower natural catastrophe losses which supported a reduced combined ratio of 94.3%, 0.7 percentage points lower than reported for the first half of 2017.
Willis Towers Watson
AM Best is maintaining its negative outlook on the global reinsurance sector after record losses in 2017 did not result in anticipated price increases. The rating agency expects overall market conditions to remain very competitive given the demonstrated available capital after major events and notes that, in the aftermath of the Markel/Nephila merger, "convergence capacity is now converged".
Economic losses resulting from monsoonal rains in Southern India are likely to be over $4 billion, according to Aon's Impact Forecasting. The General Insurance Companies of India is anticipating claims as high as $635m. Meanwhile, insured losses from Typhoon Jebi which made landfall in Japan on 4 September are likely to be in the hundreds of millions of US dollars at least, if not higher, according to its weekly cat report.
Posted: Monday, September 10th, 2018