Posts Tagged ‘convergence’



March 31st, 2016

Evolution of Risk Capital

Posted at 1:00 AM ET

The continued flow of new capital into the (re)insurance industry constitutes the largest change to the sector’s capital structure in recent memory. New capital has entered the market through investments in insurance-linked securities (ILS) funds, sidecars, hedge fund-backed reinsurance companies and collateralized reinsurance vehicles. Investors have increasingly been attracted to low correlation returns from catastrophe risk relative to traditional capital markets risks and the attractive yield for the measured (re)insurance risk relative to other investments, particularly in the current low inflation, low yield era.

Continue reading…

February 23rd, 2016

2015 Private Cat Bond Placements

Posted at 1:00 AM ET

The private market saw 20 private cat bond transactions in 2015 representing USD 903.94 million of risk capital transferred to capital market investors.

Continue reading…

February 18th, 2016

Catastrophe Bond: Fourth Quarter Primary Issuance, Part II

Posted at 1:00 AM ET

Everest Re successfully issued two tranches of Kilimanjaro Re Ltd. Series 2015-1 Notes representing an aggregate principal amount of USD 625 million. The catastrophe bonds provide Everest Re Group, Ltd. with protection against U.S. earthquake and named storm events on a per-occurrence, PCS-reported industry insured index-derived basis. The Class D Notes carry a one-year expected loss of 5.25 percent, based on AIR’s WSST catalog and investors receive an initial interest spread of 9.25 percent per annum (initial price guidance was quoted as 9.00 percent to 9.75 percent). The Class E Notes carry a one-year expected loss of 3.00 percent, based on AIR’s WSST catalog, with investors receiving an initial interest spread of 6.75 percent per annum (initial price guidance was quoted as 6.50 percent to 7.00 percent). The Series 2015-1 Notes represent the third time Everest Re has accessed the capital markets since 2014 with USD 1.575 billion aggregate limit currently outstanding.

Continue reading…

February 17th, 2016

Catastrophe Bond: Fourth Quarter Primary Issuance, Part I

Posted at 1:00 AM ET

After 2015 began with record historical issuance levels in the first quarter, the fourth quarter of 2015 was dramatically different as only USD 1.425 billion of 144A property and casualty (P&C) catastrophe bonds benefiting five sponsors were completed. This represented the second lowest level since 2005 and the lowest level since 2009. One explanation for this development may be that sponsors who would ordinarily have been willing to issue in the fourth quarter of the calendar year may have had the flexibility to delay their issuance to the following first quarter in order to obtain best execution and/or avoid transaction crowding. We view sponsors’ willingness to focus on best execution rather than specific renewal dates (while still important for overall capital planning purposes) as a further sign of the maturity of the insurance-linked securities (ILS) space. The ILS space is perceived as performing in a manner similar to the broader capital markets with their availability of capital throughout the calendar year.

Continue reading…

January 6th, 2016

Chart: Estimated Dedicated Reinsurance Sector Capital, 2012 to YE 2015

Posted at 3:27 PM ET

The chart shows that a preliminary estimate of total capital dedicated to reinsurance is approximately USD 400 billion, unchanged from the previous year.

Continue reading…

January 6th, 2016

Chart: Alternative Capacity as a Percentage of Catastrophe Reinsurance Limit

Posted at 3:25 PM ET

The chart below presents alternative capital capacity as a percentage of global property catastrophe reinsurance limit from 2008 to year-end 2015.

Continue reading…

October 28th, 2015

Guy Carpenter Examines Shifting Public Sector Risk Landscape

Posted at 10:30 PM ET

354_354-public-sector-3Guy Carpenter announced the release of its Public Sector Risk Report, Partnerships: The Way to Public Sector Risk Financing, which examines the shifting economic and risk landscapes that are driving public sector entities to consider new approaches to risk financing.

Continue reading…

October 27th, 2015

Transforming (Re)insurance Risk

Posted at 1:00 AM ET

anger_cory-smCory Anger, Global Head of ILS Structuring, GC Securities*

Contact

Over the past few years, the capital markets have become increasingly involved in (re)insurance risk. The capital providers have participated in sidecars, catastrophe bonds and more recently in hedge fund-backed reinsurance companies and collateralized reinsurance vehicles. They also have considerable appetite for subordinated debt as they strive for additional yield in today’s low interest rate environment. The attractiveness of (re)insurance market risk to the capital markets is clear. They obtain higher yields and the opportunity for diversification into risks that are not completely correlated with financial market risk. The way capital markets access (re)insurance risk is either through investing via specialists funds or setting up their own in-house teams to better understand and analyze (re)insurance risk.

Continue reading…

October 18th, 2015

Transforming (Re)insurance Risk

Posted at 8:30 PM ET

paire-eric-smmasters-unoptimised-bryan-joseph_9913-sm1Eric Paire, Head of Global Partners & Strategic Advisory EMEA, Guy Carpenter and Bryan Joseph, Principal, Vario Partners LLP

Contact

Over the past few years, the capital markets have become increasingly involved in (re)insurance risk. The capital providers have participated in sidecars, catastrophe bonds and more recently in hedge fund-backed reinsurance companies and collateralized reinsurance vehicles. They also have considerable appetite for subordinated debt as they strive for additional yield in today’s low interest rate environment. The attractiveness of (re)insurance market risk to the capital markets is clear. They obtain higher yields and the opportunity for diversification into risks that are not completely correlated with financial market risk. The way capital markets access (re)insurance risk is either through investing via specialists funds or setting up their own in-house teams to better understand and analyze (re)insurance risk.

Continue reading…

September 28th, 2015

Capital With Alternative Strategic Interests Competing For Merger & Acquisition Opportunities

Posted at 1:00 AM ET

While the alternative capital entering reinsurance markets has spurred transactions in accordance with the anti-correlation theory, other investors that have entered the market via acquisition of businesses have certainly blurred the theory’s parameter of the required level of underwriting margin.

Continue reading…