First quarter catastrophe bond issuance saw $3.1 billion in new capital come to market. $1.3 billion of this was for transactions covering Latin America and Japan also featured strongly, according to Property Claim Services. Only one transaction during the quarter covered the United States. The latest Sanders Re issuance has a hybrid trigger (with both indemnity and PCS Catastrophe Loss Index components).
Property Claim Services
Bermudian insurance and reinsurance group Aspen Insurance Holdings Limited is back in the catastrophe bond market for the first time in more than a decade, with a $150m Kendall Re Ltd. (Series 2018-1) international multi-peril transaction. The last time Aspen is listed as a sponsor of a catastrophe bond was back in 2007, with a California earthquake cat bond named Ajax Re Ltd., which had defaulted in 2009 due to the Lehman Brothers collapse.
The Federal Emergency Management Agency (FEMA) said it intends to secure additional reinsurance for the National Flood Insurance Program (NFIP) through issuance of a catastrophe bond. FEMA began purchasing private reinsurance in 2017 and recovered $1.042 billion from the private markets due to losses from Hurricane Harvey. FEMA now plans to transfer additional risk by engaging the capital markets for the first time through an ILS transaction on or about July 1, 2018.
Insurance-linked securities (ILS) maintains its advance in 2018, according to Willis Re‘s 1st View report on the 1 April renewals. It found the impact of 2017 Hurricanes Harvey, Irma and Maria (HIM) losses is proving limited. Any potential issues over non-modelled losses, such as California wildfires, have been limited to a small section of the ILS market writing aggregate covers. Again, it appears there has been no impact on appetite.
The Bermuda Monetary Authority has experienced an uptick in reinsurance registrations during the first part of 2018. Registrations for the first two months of 2018 include 11 (re)insurers, compared to five new (re)insurers recorded for the same period last year, and includes four large (Class E and Class 4) entities. Craig Swan, BMA Managing Director, Supervision (Insurance) said the BMA was pleased to see the increased registrations “despite challenging market conditions”.
Bermuda Monetary Authority
The high cost of doing business, due to high acquisition and administration, will continue pressuring underwriting results in the London insurance market in 2018, prompting Fitch Ratings to keep a negative sector outlook for the industry. The trend of rising expense ratios since 2012 was halted in 2017, staying broadly flat year-on-year for most London market insurers, but expense ratios remain high, at above 40 percent, the rating agency noted.
Colorado State University hurricane researchers are predicting a slightly above-average Atlantic hurricane season in 2018, citing the relatively low likelihood of a significant El Niño as a primary factor. The CSU Tropical Meteorology Project team is predicting 14 named storms during the Atlantic hurricane season, which runs from June 1 to Nov. 30. Of those, researchers expect seven to become hurricanes and three to reach major hurricane strength (Saffir/Simpson category 3-4-5) with sustained winds of 111 miles per hour or greater.
Colorado State University
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