Archive for the ‘Capital Markets’ Category



July 2nd, 2014

GC Securities* Completes First Ever Catastrophe Bond Alamo Re Ltd. Series 2014-1 Notes For The State Of Texas’s Windpool

Posted at 6:58 AM ET

GC Securities today announced the placement of the Series 2014-1 Notes, with notional principal at USD400,000,000, through a newly formed catastrophe bond shelf program, Alamo Re Ltd., to benefit the Texas Windstorm Insurance Association (TWIA). This is the first time that the TWIA has utilized the cat bond market to manage its tropical cyclone risks. 

Continue reading…

July 1st, 2014

GC Securities* Completes First Catastrophe Bond Issued By The World Bank On Behalf Of The Caribbean Catastrophe Risk Insurance Facility

Posted at 8:00 AM ET

GC Securities today announced the placement of Floating Rate CCRIF Catastrophe-Linked Capital at Risk Notes, with notional principal of USD30,000,000, issued by the International Bank for Reconstruction and Development, a member institution of the World Bank Group, to facilitate risk transfer on behalf of the Caribbean Catastrophe Risk Insurance Facility (the CCRIF).  CCRIF is a risk-pooling facility that is designed to limit the financial impact on its sixteen Caribbean member governments resulting from catastrophic earthquakes and hurricanes by quickly providing financial liquidity when a policy is triggered. This is the first time that the CCRIF has utilized the cat bond market and the first catastrophe bond directly issued by the World Bank. 

Continue reading…

June 17th, 2014

Alternative Market’s Impact On Traditional Reinsurers

Posted at 1:00 AM ET

The April 1, 2014 and June 1, 2014 renewals indicate that competition from the capital markets continues to play a major role in the abundance of reinsurance capacity that is placing pressure on pricing. Here we review Guy Carpenter analyses examining the impact of the alternative markets on traditional reinsurers and how reinsurance carriers are expected to face that challenge through the year. 

Catastrophe Bond Outlook for 2014: The growing influence of alternative markets capacity is pressuring traditional reinsurers’ business model and challenging them to compete against a model with lower-cost of capital that continues to enter the reinsurance market. Most reinsurance companies have responded to the challenge by leveraging their incumbent status on reinsurance programs, offering similar or better terms and similar or reduced pricing. Particularly, traditional players are emphasizing their ability to efficiently provide reinstatements, which are seen by many as a critical part of core reinsurance programs, particularly for working reinsurance layers. Traditional players are also hedging their bets and creating their own capital markets divisions to attract, manage and utilize capital from third-party sources whether in the form of fund management, managed accounts or sidecars. This will allow reinsurers the opportunity to securitize the most capital-intensive parts of the business while providing valuable cost-efficient capacity in other business lines.

Read the article>>

 

Catastrophe Bond Update, Fourth Quarter 2013: Influence from direct capital markets’ participation in reinsurance programs, coupled with catastrophic insured losses well below historical averages in 2013, put significant pressure on global catastrophic reinsurance pricing. As a result of significantly reduced pricing (relative to recent years), approximately USD7.1 billion worth of new property/casualty (P&C) catastrophe bonds were issued in 2013 - the second largest record year for P&C issuance. The year included seven new sponsors - American Coastal, American Modern, AXIS Capital, the Metropolitan Transportation Authority (MTA), QBE, Renaissance Re and the Turkish Catastrophe Insurance Pool - who collectively secured USD1.46 billion of catastrophe bond capacity. In addition to new sponsors, another prevalent change in the market was the increasing use and acceptance of indemnity-based triggers. Given that spreads have tightened between indemnity and other trigger types, sponsors were inclined to take advantage of investors’ openness to indemnity triggers to reduce coverage basis risk without a material increase in pricing relative to non-indemnity trigger pricing.

Read the article>>

 

Click here to register to receive e-mail updates >>

Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/NFA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, main office 25 The North Colonnade, Canary Wharf, London E14 5HS. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product.

June 12th, 2014

Deployment of Collateralized Property Catastrophe Capacity

Posted at 1:00 AM ET

mowery_lara_bioLara Mowery, Global Head of Property
Contact

The impact the capital markets have had on the property catastrophe reinsurance space is undeniable. Analyzing 2013 market activity, it is also undeniable that much of the movement the market witnessed is as much driven by traditional reinsurers’ changing behaviors. While companies buying catastrophe coverage benefitted, across product type and geography, from collateralized capacity in the market, deployment of this capacity has been targeted.

Continue reading…

June 5th, 2014

Increasing External Demands Compel Companies to Improve Risk Management Disclosures

Posted at 1:00 AM ET

Guy Carpenter released its latest Enterprise Risk Management (ERM) Benchmark Review earlier this year providing an in-depth analysis of risk management practices and policies of 67 insurance and reinsurance companies located in Europe, United States, Bermuda, and Asia-Pacific. Based on publicly-available data from financial and risk reports, Guy Carpenter’s ERM Benchmark Review reveals that most (re)insurers are managing capital with metric-based frameworks and are publishing more about their risk management targets than seen in Guy Carpenter’s 2009 analysis. Capital market, legislative, and regulatory influences, such as the approaching implementation of Solvency II, are expected to further compel company managements to better recognize and analyze the risks of their enterprises.

Continue reading…

May 27th, 2014

Trends in Convergent Capital in the Reinsurance Sector

Posted at 1:00 AM ET

Here we review GC Capital Ideas entries highlighting trends in convergent capital in the reinsurance sector. 

Chart: Evolution of Dedicated Reinsurance Capital, 2012 - YE 2013: The evolution of dedicated sector capital is presented in this chart. Guy Carpenter estimates this rose marginally in 2013 to USD322 billion at year-end as underwriting profits from low catastrophe claims and convergence capital inflows offset unrealized losses, sustained share buybacks and dividend payments.

Read the article>> 

 

Chart: Catastrophe Bond Issuance and Capital Outstanding: Issuance reached a record high of USD7.1 billion, surpassing 2007’s total. Risk capital outstanding also reached an all-time high of USD18.6 billion last year.

Read the article>> 

 

Chart: Pension Fund Capital Under Management and Allocations into Reinsurance: As the illustration shows, pension funds alone are worth around USD30 trillion. Based on Guy Carpenter’s analysis of possible capital allocation percentages to the (re)insurance space in consultation with sector experts, a maximum of USD900 billion of this amount could potentially be available for insurance-linked investments.

Read the article>> 

 

Click here to register to receive e-mail updates>>

*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/NFA/SIPC. Main Office:  1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, main office 25 The North Colonnade, Canary Wharf, London E14 5HS.  Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC.  MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies.  This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product.  **GC Analytics is a registered mark with the U.S. Patent and Trademark Office.

May 14th, 2014

Review of GC Securities* Deals

Posted at 1:00 AM ET

Here we review recent deals of GC Securities* from the past six months and featured on GC Capital Ideas:

GC Securities* Completes 144A Indemnity Triggered Europe Windstorm Catastrophe Bond for Assicurazioni Generali S.p.A. : GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/NFA/SIPC, today announced the placement of Principal At-Risk Variable Rate Notes, with notional principal at €190,000,000, through a newly formed special purpose reinsurance vehicle domiciled in Ireland, Lion I Re Limited, to benefit Assicurazioni Generali S.p.A., an Italian insurance company and the parent company of the Generali Group. This is the first time that Assicurazioni Generali S.p.A. has utilized the cat bond market and is the first ever 144A cat bond to provide indemnity protection against Europe windstorm risks. Additionally, it is the first Italian sponsored catastrophe bond.

Read the article>>

 

GC Securities* Completes Catastrophe Bond Queen Street IX Re Limited for Munich Re: GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/NFA/SIPC, today announced the placement of the Principal At-Risk Notes, with notional principal of $100,000,000, through a newly formed catastrophe bond, Queen Street IX Re Limited, to benefit Munich Re. This is the ninth Queen Street cat bond to benefit Munich Re, the eighth overall cat bond issuance benefitting Munich Re since 2011 and the first cat bond issuance benefitting Munich Re provided via an Irish special purpose reinsurance vehicle.

Read the article>>

 

GC Securities* Acts as Sole Financial Advisor on the Second Largest Ever M&A Transaction in the Lloyd’s Market: GC Securities* is acting as sole financial advisor to the shareholders of Canopius Group Limited (”Canopius”) in the sale of Canopius to NKSJ Holdings, through its insurance subsidiary Sompo Japan Insurance Inc. The sale agreement was signed on December 18, 2013 and the transaction is expected to close in the second quarter of 2014, subject to regulatory approval.  Upon closure this will be the second largest ever M&A transaction in the Lloyd’s market.

Read the article>>

*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/NFA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, main office 25 The North Colonnade, Canary Wharf, London E14 5HS. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product. **GC Analytics is a registered mark with the U.S. Patent and Trademark Office.

 

Click here to register to receive e-mail updates

April 28th, 2014

GC Securities* Completes 144A Indemnity Triggered Europe Windstorm Catastrophe Bond for Assicurazioni Generali S.p.A.

Posted at 11:30 PM ET

GC Securities, a division of MMC Securities Corp., a U.S. registered broker-dealer and member FINRA/NFA/SIPC, today announced the placement of Principal At-Risk Variable Rate Notes, with notional principal at €190,000,000, through a newly formed special purpose reinsurance vehicle domiciled in Ireland, Lion I Re Limited, to benefit Assicurazioni Generali S.p.A., an Italian insurance company and the parent company of the Generali Group. This is the first time that Assicurazioni Generali S.p.A. has utilized the cat bond market and is the first ever 144A cat bond to provide indemnity protection against Europe windstorm risks. Additionally, it is the first Italian sponsored catastrophe bond

Continue reading…

April 24th, 2014

Capital Stewardship Options

Posted at 1:00 AM ET

Here we bring together recent GC Capital Ideas stories that have presented options that good capital stewards in the reinsurance industry are currently considering for deployment of excess capital. 

Maintaining the Status Quo: One of the biggest challenges facing reinsurers is deciding how to deploy excess capital to generate a return that meets or exceeds the expectation of investors or shareholders.

Read the article>> 

 

Return to Shareholders:  As a principle, excess capital should be returned to shareholders in periods of low return opportunity (particularly below cost of capital) while more capital should be retained/deployed during periods that offer higher returns. The chart here on the Global Reinsurance Composite Return of capital shows that reinsurers have been relatively disciplined over the last eight years, with carriers returning more capital when the pricing environment has softened.

Read the article>> 

 

Organic Growth: With an abundance of excess capital, negligible growth in global reinsurance spend and the pricing outlook continuing to soften, one of the biggest challenges facing reinsurers is deciding how to deploy this excess capital to generate a return that meets or exceeds the expectation of investors or shareholders. Here we consider the option of organic growth.

Read the article>> 

 

M&A - Grow/Diversify by Product Line: As carriers explore M&A opportunities to grow in the current environment, there is strong interest from potential buyers looking for bolt-on opportunities rather than transformational transactions. Although this demand has not to-date triggered a significant increase in M&A transactions, the ingredients for more activity are now in place.

Read the article>> 

 

M&A - Grow/Diversify by Territory: With growth opportunities limited in mature markets, many insurers are looking to emerging markets for future expansion, in particular China, Southeast Asia and Central and Latin America. The chart here highlights gross written premium growth in emerging markets compared to developed markets from a 2003 base.

Read the article>> 

 

M&A: Achieve Meaningful Scale in Reinsurance: In a reinsurance market with abundant excess capital and where most reinsurance programs are oversubscribed, the need for a meaningful line size or differentiated underwriting contribution has never been more relevant.

Read the article>> 

 

M&A: The Evolving Legacy (Run-Off) Market: The recent completion by legacy solution specialists of a number of acquisitions in the live insurance space could be a watershed moment for the standalone run-off market. The original business concept of a run-off manager was a pure focus on legacy business - to achieve finality in legacy claims and manage the outstanding book of legacy business in the same cost efficient way that an insurer would manage a renewal book of business.

Read the article>> 

 

Click here to register to receive e-mail updates >> 

 

Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/NFA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, main office 25 The North Colonnade, Canary Wharf, London E14 5HS. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product. **GC Analytics is a registered mark with the U.S. Patent and Trademark Office.

March 19th, 2014

Increasing External Demands Compel Companies to Improve Risk Management Disclosures

Posted at 11:30 PM ET

Guy Carpenter released its latest Enterprise Risk Management (ERM) Benchmark Review that provides an in-depth analysis of risk management practices and policies of 67 insurance and reinsurance companies located in Europe, United States, Bermuda, and Asia-Pacific. Based on publicly-available data from financial and risk reports, Guy Carpenter’s ERM Benchmark Review reveals that most (re)insurers are managing capital with metric-based frameworks and are publishing more about their risk management targets than seen in Guy Carpenter’s 2009 analysis. Capital market, legislative, and regulatory influences, such as the approaching implementation of Solvency II, are expected to further compel company managements to better recognize and analyze the risks of their enterprises.

Continue reading…