News review | November 23 2015

The CEO of UK terrorism backstop Pool Re has responded to the French prime minister Manuel Valls' concerns over chemical or biological attacks by terrorist groups. "Pool Re is ready and able to respond to any such heinous assault on UK soil," said Julian Enoizi. "Scenario planning and response-mechanism testing, including for chemical, biological, radiological and nuclear threats, is, as always, under way." He also welcomed the UK Chancellor's speech on cyber terrorism where he ranked it alongside "guns, bombs and knives" as terrorist weapons the UK needs to defend itself against.
Pool Re

The UK's newly created flood reinsurance backstop, Flood Re, is on course to secure a £2.1 billion ($3.2 billion) reinsurance programme. It revealed some of the industry's leading reinsurers had collectively offered £1.29 billion ($2 billion) of retrocessional cover a year, with leaders Munich Re and Swiss Re "contributing very significant support". The three-year programme is one of the five largest "natural peril" reinsurance deals struck globally and the second biggest in Europe.
Flood Re

The UK government has begun its legislative process for introducing a new ILS framework, which is currently progressing through the House of Lords. A government amendment to the Bank of England and Financial Services Bill has been tabled, and seeks a power for HM Treasury to make regulations facilitating and regulating ILS business. The main focus of the power is special purpose vehicles used in ILS transactions. "ILS is very much at the innovative end of the market and we want London to be the next big centre for this business," said Malcolm Newman, CEO of SCOR's Paris-London Hub, chairman of the IUA and sponsor of the London Market Group's ILS Working Group.
London Market Group

US military mutual insurer USAA's Residential Re 2015 cat bond deal has upsized to $125m. From launch the bond was seeking $100m of protection as it looks to secure its 25th layer of cat bond backed reinsurance from the capital markets. The deal has now grown by 25%, likely due to higher demand from investors seeking to gain access to the notes.
Artemis

Everest Re is set to close its largest cat bond issuance to date through the $625m Kilimanjaro Re 2015 transaction. The deal will provide industry loss-linked cover on a per-occurrence basis for earthquake and named storm events across the US, Puerto Rico and Canada. Everest Re more than doubled the target volume of the deal, which helped to maintain pricing in the middle of the initial forecast range.
Insurance Insider

The cat bond market is likely to take on increasingly longer-dated risk as it looks to build on one of its pillars of competitiveness - offering multi-year reinsurance solutions, Aon Securities CEO Paul Schultz said at an Insurance Institute of London lecture at Lloyd's. While three year bonds were standard in the early days of the market, Schultz said it was just a matter of time before ILS deals stretched to four or seven years.
Trading Risk

Traditional reinsurers are adapting to a rapidly changing business environment, including challenges from new competitors and increasing industry consolidation as a period of soft pricing and excess capacity pressures their profitability, said panellists at the 2015 Bermuda Reinsurance Conference sponsored by Standard & Poor's Ratings Services and PwC Bermuda. Much of the excess capacity may soon begin to disappear, said Greg Haft, head of the worldwide catastrophe reinsurance business at PartnerRe Ltd.
Standard & Poor's

PartnerRe has received shareholder support for its takeover by Exor, the Italian company owned by the Agnelli family. The Italian investment firm behind Fiat Chrysler Automobiles and Juventus Football Club, announced its counter $6.4bn proposal for the reinsurer in April, at a time when the firm was committed to merging with rival Axis Capital. Exor's acquisition of PartnerRe is expected to close during the first quarter of 2016.
PartnerRe

Lloyd's insurer Beazley has launched a parametric weather product for the Australian market. Weather Guard offers cover for weather-triggered sales promotions and prize giveaways as well as the more traditional uses for weather insurance, such as stabilising revenue or managing unplanned additional costs. The product is powered by Beazley's access to a comprehensive weather database that sources information from over 5,500 weather stations worldwide.
Beazley

Posted: Monday, November 23rd, 2015