News review | November 05 2018

USAA has returned to the cat bond market for the second time this year with a high-risk ILS transaction. The $150m Residential Reinsurance 2018-II cat bond will provide the insurer with US multi-peril protection on an indemnity per occurrence basis. USAA is of the cat bond sponsors set to claim capital from ILS investors following last year’s catastrophe losses, with five of its cat bonds were said to be impacted following Hurricanes Harvey, Irma and Maria.
Trading Risk

RenaissanceRe has announced it will acquire Tokio Marine’s reinsurance platform, which includes Tokio Millennium Re AG and Tokio Millennium Re (UK) Limited for approximately $1.5 billion. "This transaction will increase our scale, broaden our reach and extend our ability to apply our core strengths to a deeper customer base," said Kevin O’Donnell, president and CEO of RenRe.

Neuberger Berman Group has acquired ILS fund Cartesian Re and its reinsurer Iris Re. Terms of the transaction were not disclosed. The funds manage ILS strategies focused on natural catastrophes. “We don’t have a tremendous number of solutions that have no correlation to traditional markets that are traded,” said David Kupperman, co-head of Neuberger Berman’s alternative-investment management team, adding the acquisition is an “intriguing complement to the set of solutions we have for institutional clients.”

The Finance Minister of Singapore has announced the launch of the world’s first commercial cyber risk pool, a facility for providing cyber insurance to corporate buyers in the Asia region that is expected to be backed by both insurance-linked securities (ILS) and reinsurance. Singapore’s Minister of Finance Heng Swee Keat announced the launch of the cyber risk insurance pool at his opening speech to the attendees of the 15th Singapore International Reinsurance Conference.
Global Capital

The US Federal Emergency Management Agency (FEMA) has begun its procurement process for a 2019 flood reinsurance program renewal for its National Flood Insurance Program (NFIP), with multi-year protection being eyed. Most recently FEMA came to the catastrophe bond market for the first time, resulting in the successful placement of the $500m FloodSmart Re cat bond.

Average ILS returns fell to a 0.08 percent loss in September, reflecting claims activity from the Japanese typhoons and Hurricane Florence, according to the Eurekahedge ILS Advisers Index. A gain from cat bond funds mitigated a larger decline posted by mixed ILS strategies investing in collateralised reinsurance. Pure cat bond funds as a group returned 0.34 percent while the subgroup of funds that invest in private ILS fell to a loss of 0.38 percent.
Trading Risk

American International Group Inc reported a smaller quarterly loss than anticipated in earlier forecasts, as reinsurance pacts helped offset catastrophe losses in Japan and North America. The insurer posted a net loss of $1.26 billion for Q3, mainly related to typhoons in Japan as well as Hurricane Florence. AIG’s revised estimates for California mudslides also contributed to the losses.

Posted: Monday, November 5th, 2018