New parametric extreme weather microinsurance product in the Philippines | www.Artemis.bm
A new microinsurance product is targeting cooperatives in the Philippines to give them an affordable source of parametric insurance to protect them against the knock on effects to their loan portfolios from extreme weather events involving wind and rainfa
Philippines considering catastrophe pools and bonds | www.Artemis.bm
The Philippines is one of those nations which is extremely exposed to natural disasters and weather risks. From flooding, to wildfires to super-typhoons (like Megi which is currently impacting part of the Philippines) any country so exposed to disasters n
20 automated weather stations to help Ethiopia launch weather insurance | www.Artemis.bm
The U.N. World Food Programme has donated 20 automated weather stations to the National Meteorological Agency of Ethiopia. The stations have been installed this week and aim to provide real-time data for both climate early warning and weather risk managem
First snowfall contract of this winter trades on the CME | www.Artemis.bm
The Chicago Mercantile Exchange (CME) has seen its first snowfall contract trade in the past week. With winter approaching companies are beginning to think about winter weather and seeking to hedge their exposures to either too much snow or too little.
Aliseo Re founded in Barbados with focus on industry loss warranties | www.Artemis.bm
Aliseo Reinsurance SCC has been founded in Barbados and yesterday announced its intention to start operating with an initial capitalization of $300m in January 2011. Aliseo Re is targeting the global retrocession market and focused on providing catastroph
IFC providing more grants for African index-insurance schemes | www.Artemis.bm
The International Finance Corporation (IFC), part of the World Bank Group, has signed new agreements with three partner index-insurance schemes in Africa to help expand access to microinsurance products for farmers and livestock herders. The schemes aim t
Catastrophe pools gaining favour in Central Asia and the Caucasus | www.Artemis.bm
A recent event held in central Asia, the Azerbaijan International Forum dedicated to Catastrophe Risks and Construction Safety which is an event assisted by the UN Economic Commission, saw delegates discussing measures to deal with catastrophe risks. The
Kortis Capital Ltd. to issue longevity catastrophe bond for Swiss Re | www.Artemis.bm
Kortis Capital Ltd., a Cayman Islands domiciled SPV, is to issue a series of longevity-linked insurance-linked securities (or catastrophe bonds) on behalf of cedent Swiss Re. This is the first cat bond type structure used to transfer longevity risks to th
Free markets can still feed the world (Robert Zoellick in the FT)
The overarching goal should be to ensure that the most vulnerable people and countries are no longer denied access to nutritious food. The G20 can achieve this, providing we develop a robust menu of other risk management products. In some cases, the most useful tools might be weather insurance or a rainfall index; in others, it could be a hedge on energy prices to keep transport and input costs low.
Wintry weather in U.S. increases interest in snowfall derivatives | www.Artemis.bm
It’s two years since the Chicago Mercantile Exchange (CME) launched its snowfall derivative contracts giving market participants a way to hedge the risks of there being too much snowfall and that impacting their business and profits. The snowfall contracts have been gaining traction and increasing interest especially since the recent snow storms have struck the U.S.
Wintry weather in U.S. increases interest in snowfall derivatives | www.Artemis.bm
It’s two years since the Chicago Mercantile Exchange (CME) launched its snowfall derivative contracts giving market participants a way to hedge the risks of there being too much snowfall and that impacting their business and profits. The snowfall contracts have been gaining traction and increasing interest especially since the recent snow storms have struck the U.S. This winter (and last) in the U.S. has seen heavy snowfalls across much of the country, along with lower temperatures than in previous years and the impact this has been having has caused an uplift in snowfall derivative contracts trading on the CME.
Renewed interest in non-traditional asset securitizations could spark cat bonds | www.Artemis.bm
Non-traditional securitized assets have been growing in popularity and receiving increasing levels of interest from investors and issuers alike. The solid performance demonstrated during the recent downturn and continuing attractive bond yields should help to keep investor interest strong in non-traditional U.S. asset securitizations through 2011 according to a report from Standard & Poor’s.
Vitality Re could attract the health care industry to insurance-linked securities | www.Artemis.bm
The Vitality Re Ltd. insurance-linked security transaction issued on behalf of Aetna in December was a groundbreaking transaction in many ways. It allowed Aetna to transfer the risks of medical benefit claims exceeding pre-defined attachment points to the capital markets in a way previously not attempted, using a catastrophe bond type ILS structure.
Doug Smith: Social Impact Bonds – Right Result, Wrong Way (Part 1)
Social impact bonds, a useful experiment underway in England, is gaining attention on this side of the pond, including from the Obama administration. We are glad to see this at SeaChange (a non-profit group seeking innovative ways to bring capital to the non-profit sector). What is deeply concerning, though, is how some elites are packaging and promoting social impact bonds as yet one more example of everything the market does is good while everything government does is bad. Moreover, these same elites betray a stunningly superficial grasp about how markets actually work.
Doug Smith: Social Impact Bonds – Wrong Result, Wrong Way (Part 2) « naked capitalism
Liebman, Leonhardt and others need to move beyond sloganeering to learn how to increase the odds that various market disciplines can combine with organizational, network and personal disciplines to promote effective performance instead of cancerous performance. Their all-too glossy, air brushed pin up pictures of ‘market discipline’ jeopardize instead of advance the odds of success for social impact bonds. The conventional wisdom spouted in their writings actually increase the odds of ‘wrong result/wrong way’ for social impact bonds.
Kenyan weather microinsurance program expands | www.Artemis.bm
With farmers in Kenya increasingly fearing large weather-related losses to their crops and livestock, and the access to weather data and infrastructure improving, the Kilimo Salama crop weather insurance program launched by UAP Insurance, Syngenta Foundation and mobile operator Safaricom is going to expand in scope and availability.
Guy Carpenter takes over as reinsurance broker for the CCRIF (Artemis)
The Caribbean Catastrophe Risk Insurance Facility (CCRIF) have announced a change of their placing reinsurance broker for this year. Guy Carpenter will be taking over as the new reinsurance broker for the facility and replaces Aon Benfield who provided the service to the facility last year.
Play the Oil Futures Market With Airline Fares! (WP)
Allegiant Air, the Las Vegas-based no-frills airline, outlined its plans to let passengers play the oil futures market in a recent letter to the DOT. “When making a purchase, consumers would be able to choose between a traditional locked in fare that would not fluctuate, and a lower fare that could change before the date of travel,” wrote company chairman Maurice J. Gallagher Jr. “That lower fare could be reduced further or could increase, up to a set maximum that would be clearly disclosed, depending on changes in fuel price between the booking and travel dates.” Here’s how it might work: The next time you go airfare shopping, you might see a “locked in” fare for $99 and a flexible fare for $69. But the flexible fare would be tied to the price of oil. If jet fuel prices rise before your flight, you could pay the difference — maybe an extra $39. Or you could get a refund, theoretically, if fuel prices fall.
Brazil would benefit from parametric insurance solutions says Swiss Re | www.Artemis.bm
Natural disasters will likely become more frequent in Brazil and more expensive in terms of loss of human lives and financial expenditure by the government to rebuild and support those without insurance. Frequency of natural disaster in Brazil is on the rise, according to this Business News Americas article quoting a Swiss Re exec, with heavy rain, flooding and avalanche (by which we assume they mean land/mud slides) increasing the most.
The World Bank is taking the rare step of encouraging companies in developing countries to buy insurance in the derivatives markets against sudden changes in food prices with a deal that should allow them to hedge $4bn worth of commodities.
It May Not Work Perfectly, But It’s a Damn Sight Better than Sarkozy’s “Popular Terrors” | Streetwise Professor
The World Bank has midwifed a deal to facilitate hedging of agricultural prices in developing nations. The bank has committed to sleeve the credit risk for “simple” hedging trades that JP Morgan does with private businesses like farm coops and ag processors in developing countries. In theory this is a great idea–though beware, it will necessarily require more evil speculators to enter the market to bear the risk! But I have my doubts about how things are going to work out in practice. My doubts arise from the fact that although hedges should be evaluated ex ante, they are all too often criticized ex post. That is, whether a hedge makes sense should be determined before you see how prices move: after all, the point of a hedge is to reduce exposure to price risk, protecting against the downside by giving up the upside. But it is all to common, and perhaps all to human, to evaluate hedges after one has seen how prices moved in fact.
New Vita Capital IV Ltd. mortality-linked catastrophe bond marketed by Swiss Re | www.Artemis.bm
"Swiss Re are returning to the market with two new series of Vita Capital IV mortality risk linked notes. Swiss Re are seeking to issue $100m of mortality catastrophe-indexed notes through their Vita Capital IV Ltd. Cayman Islands domiciled SPV. Vita Capital IV was set up for the sole purpose of issuing a number of series of notes as part of a mortality catastrophe shelf program. Mortality events would include pandemics, epidemics, disasters, terrorist attacks etc.
Clariden Leu’s ‘cat bond lite’ wins Catastrophe Risk Deal of the Year award from Environmental Finance | www.Artemis.bm
The catastrophe bond lite transactions, which were issued by Swiss insurance-linked securities investment manager Clariden Leu to provide more capacity to satisfy the investor inflows they were experiencing, have been recognised with an award. Environmental Finance magazine have awarded the Catastrophe Risk Deal of the Year award to Clariden Leu as recognition of these transactions innovative structure and goals.
Weather-index insurance helps some drought stricken farmers in Kenya | www.Artemis.bm
Some farmers in a drought stricken region of Kenya have received payments under the terms of a weather-index based microinsurance policy established this year. Wheat farmers in Narok County in southwest Kenya have received payments for a total crop failure due to drought in April.
Terrorism Market Continues to Provide Abundant Cover | GCCapitalIdeas.com
The terrorism threat is forever evolving as groups adapt their tactics to counter-terrorism measures and global events. Indeed, key developments that have occurred over the past 12 months, including the killing of al-Qaeda leader Osama bin Laden and the recent political unrest in the Middle East and North Africa, raise important questions about the future of the international terrorist threat. For insurers with terrorism risk on their books, it is important to understand how the terrorism threat is evolving, the varying risks in different regions and what developments are likely in 2011 and beyond.
Innovative catastrophe bond type structure used to cover risks of lottery winnings for MyLotto24 | www.Artemis.bm
Just when you think the insurance-linked securities market can’t get any more interesting and innovative, a deal comes along which breaks new ground and brings a new type of risk to insurance-linked securities investors. Artemis.bm can reveal a groundbreaking deal which has recently been completed providing the sponsor with cover for exceptional jackpot winnings in their lotteries.
Insurance-linked securities and parametric insurance cited as innovations by Swiss Re | www.Artemis.bm
The latest sigma report from reinsurer Swiss Re’s Economic Research & Consulting division takes a look at innovation in non-life insurance markets. The report says that although insurers are often seen as lacking in innovation there is actually considerable product innovation happening in the markets but much of it happens incrementally. Alternative risk transfer techniques, including insurance-linked securities and catastrophe bonds, however are an example of a more fundamental change in the sector.
Hedge funds increasingly involved in reinsurance business as diversification tool | www.Artemis.bm
Hedge funds are showing increased interest in the reinsurance sector as they look for ways to diversify their investment strategies and to deploy their accumulated capital, according to a briefing paper published by ratings agency A.M. Best. The extent of the catastrophic losses experienced during 2011 has served to heighten this interest as hedge fund entrants to the reinsurance sector look to replace capital lost due to the catastrophes of 2011.
Earlier this week we wrote that the Caribbean Catastrophe Risk Insurance Facility (CCRIF), the catastrophe risk pooling facility who provide parametric based disaster insurance cover to Caribbean countries, had finalised their renewals for the 2012-2013 policy year. All 16 of their member countries renewed their hurricane and earthquake cover and now the CCRIF are actively negotiating and discussing their soon to launch excess rainfall cover with their members.
Governments encouraged to look to ex-ante risk financing such as catastrophe bonds | www.Artemis.bm
Governments should seek to avoid becoming the insurers of last resort when disaster strikes by choosing to buy protection through ex-ante risk financing mechanisms offered by the insurance and reinsurance markets. Despite a trend towards more catastrophe insurance coverage, the increasing uptake is not keeping pace with the growing amount of uninsured losses and this gap looks set to widen as the developing nations of Africa and Asia modernise and economic loss exposures grow.
