News review | November 30 2015

Zenkyoren has returned to the cat bond market with a new $200m Nakama Re offering, seeking reinsurance cover for Japanese earthquake events. The indemnity transaction has a similar structure to the mutual insurer's $375m Nakama Re 2014 issuance, with the deal split between a per-occurrence cover and a rolling three-year aggregate layer. However, both layers this year have a five-year risk period, whereas in the 2014 transaction the per-occurrence layer was only on risk for four years.
Trading Risk

Barbican Managing Agency has received approval from the Lloyd’s Franchise Board to manage Arcus Syndicate 1856 (Arcus 1856). The syndicate, which has a first year stamp capacity of £90m, will begin underwriting business attaching on or after 1 January 2016. Arcus 1856 is fully capitalised with funds managed by Credit Suisse ILS and led by the firm’s former London-based ILS team, Rajiv Punja, executive director, Nicky Payne, active underwriter and Adrian Gfeller, chief risk officer. Key lines of business are property reinsurance and specialty, including marine, energy, cyber and space and aviation.

Eight Lloyd's syndicates have set up an emerging markets consortium designed to help economies build resilience against natural catastrophes. The syndicates have committed capacity of $400m towards solutions to address nat cat risks in emerging markets, with an aim to focus on risk sharing initiatives. The group has issued an open invitation to work with international organisations including the World Bank and plans to engage with governments, municipalities and NGOs.

China's Fosun International has completed the acquisition of the remaining 80% equity interest in Ironshore. Kevin Kelley, CEO of Ironshore said: “Fosun’s financial strength and established investment management approach provides long-term strategic capital to bolster Ironshore’s expansion strategy and further adds to Ironshore’s uniqueness. With our new owner, Ironshore is well positioned for the future as a global insurance industry leader.”
Fosun International

The global economy will strengthen moderately next year, supporting insurance premium growth in most regions, according to Swiss Re. It expects demand for non-life insurance to grow, led by an 8% to 9% annual gain in the emerging markets in 2016 and 2017. However, the global economy faces three main headwinds, it warns: slower growth in China, lower commodity prices and an imminent rate increase by the Federal Reserve.
Swiss Re

The European Commission has recognised Bermuda's prudential framework for re/insurance and group supervision as being fully equivalent to Europe's Solvency II regulatory framework. This equivalence decision will be applied retroactively on 1 January 2016. Jeremy Cox, CEO of the Bermuda Monetary Authority said: “This is significant news for Bermuda and the island’s future as a strong financial services centre... Solvency II equivalence would mean Bermuda’s commercial (re)insurers and insurance groups will not be disadvantaged when competing for, and writing, business in the EU.”
Bermuda Monetary Authority

The UK Financial Conduct Authority has announced it will investigate insurers' use of Big Data. Christopher Woolard, director of strategy and competition said: "Big Data is having an ever-growing social and commercial impact, and has the potential to transform practices and products across financial services. We are starting our work on Big Data by seeking to better understand how insurance firms are using data, and how this may evolve in the future."
Financial Conduct Authority

Climate change will exacerbate the negative sovereign rating impact of major natural disasters, according to Standard and Poor's. It is the first time the rating agency has quantified the severity of the economic and ratings impact of climate change. The most notable climate change risk increases include tropical cyclones in the Bahamas, Barbados, Dominican Republic, Jamaica, and Vietnam, and floods in Thailand.
Standard & Poor's

PERILS, the independent Zurich-based company providing industry-wide catastrophe insurance data, has extended its market coverage to include Turkey. It will make available market-wide property sums insured exposed to earthquake and flood events in Turkey via its database, as well as to provide event loss data for any major events. The addition of Turkey brings to 14 the number of territories currently covered by PERILS, which also includes: Austria, Belgium, Denmark, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Norway, Sweden, Switzerland and the United Kingdom.

Posted: Monday, November 30th, 2015