UNICEF looks to catastrophe bonds as post-disaster funding structures
Catastrophe bonds continue to gain traction as a potential capital structure for delivering post-disaster financing or funding for international humanitarian and development organisations, with the United Nations agency UNICEF among the latest to explore insurance-linked securities.
CEA's new cat bond prices at top-end, reflects rising spread expectations
In a further sign of the increased return expectations of investors in catastrophe bonds, the pricing for the latest catastrophe bond from the California Earthquake Authority has now been fixed at the top-end of initial guidance.
Discipline has returned to the ILS market: Roundtable
Investors in the insurance-linked securities (ILS) space are demanding discipline from managers in the wake of recent loss events and subsequent loss creep, while an elevated need for comfort is leading to a surge in demand for proportional deals, according to industry experts.
The business model is straightforward. Policyholders, usually people over 65 holding multimillion-dollar plans, agree to sell their insurance to investors, often at a third of its value. The new owners pay the premiums and ultimately collect the death benefit. Those speculators are ghoulishly betting that the former policyholders will die sooner rather than later, creating an early payout and a tidy profit.
Significant opportunities for parametric growth, say Descartes execs
Recent developments in the re/insurance and ILS markets have resulted in a significant expansion of parametric solutions, and executives at Descartes Underwriting believe many opportunities for further growth are now available to companies offering these kinds of products.
World Bank completes issuance of Philippines first catastrophe bond
The World Bank has now successfully completed the issuance of the first catastrophe bond to benefit the Philippines with a source of capital markets backed disaster insurance, as the $225 million IBRD CAR 123-124 cat bond transaction listed on the Singapore Exchange (SGX) this morning.
Philippines "climate proofing" cat bond benefited from Singapore grant
The government of the Philippines sees the successful issuance of its first catastrophe bond, the World Bank facilitated $225 million IBRD CAR 123-124 cat bond, as an example of the country “climate proofing” itself, as well as an endorsement of its natural disaster resilience strategy.
Philippines cat bond illustrates Singapore - World Bank alignment on ILS
Singapore and the World Bank aligned their missions to collaborate on the recent landmark first catastrophe bond issuance for the Philippines, as the pair look to stimulate insurance-linked securities (ILS) issuance in Asia as a financial solution for climate resilience.
AXA to launch FastCat parametrics as it accelerates climate strategy
Global insurance and reinsurance group AXA has launched a new phase in its climate strategy and has announced a new parametric risk transfer service called FastCat as part of its commitment initiatives.
Buffer tables, collateral lock-up, capital efficiency = the biggest issues in ILS
The biggest issues facing the insurance-linked securities market today, all surround the terms and contractual language related to collateral lock-up and commutations, while loss buffer tables have been seen to cause particular problems as they are often too simplistic,
Pricing power will continue to exist, but it will be significantly moderated and fairer, while reinsurance capital gets priced increasingly accurately and sustainably going forwards.
AXA XL sets Galileo Re 2019-1 cat bond target at up to $575m
AXA XL, the global specialty insurance and reinsurance unit of the AXA Group, is hoping to upsize its latest catastrophe bond issuance, as the Galileo Re Ltd. (Series 2019-1) transaction is now aiming for up to $575 million of protection for the firm, but two tranches of the issuance have been pulled.
Red Cross' volcano cat bond targets multi-continent coverage from Q1 issue
The Red Cross’ volcano cat bond will target covering the risks associated with ten volcanoes from across South, Central and North America, as well as Asian & African countries.
Swiss Re's reinsurance sidecar Sector Re nears $1.1bn in size
Global reinsurance company Swiss Re has significantly increased its use of alternative or third-party investor capital within its collateralised retrocessional reinsurance sidecar vehicle Sector Re Ltd., taking the vehicles total assets to close to $1.1 billion this year.
Everest Re aims for up to $800m from Kilimanjaro III Re cat bonds
Everest Re has lifted its targets for its latest catastrophe bond issuances, with the company now hoping to secure between $500 million and $800 million of retrocessional reinsurance from the Kilimanjaro Re III transactions.
Everest Re gets $850m cover from new Kilimanjaro Re catastrophe bonds
Everest Re has now secured an $850 million slice of retrocessional reinsurance protection from the capital markets with its latest dual issuance of two series of notes from its Kilimanjaro Re Ltd. cat bond issuance vehicle.
AXA XL settles for $475m Galileo Re 2019-1 catastrophe bond
AXA XL, the global specialty insurance and reinsurance unit of the AXA Group, will settle its latest catastrophe bond Galileo Re Ltd. (Series 2019-1) at $475 million in size, as the company fixes pricing and allocations for its latest capital markets backed reinsurance transaction.
UK pension risk transfer to accelerate as schemes mature, says Mercer
Mercer, the global consulting subsidiary of broking and advisory giant Marsh & McLennan Companies, expects the UK bulk annuity market to exceed £40 billion by the end of 2019, and has projected accelerated growth in pension risk transfer over the next decade as schemes mature.
Swiss Re back with $175m Matterhorn Re 2020 named storm cat bond
Global reinsurance giant Swiss Re is back in the catastrophe bond market and seeking to sponsor its second Matterhorn Re catastrophe bond, as it looks to secure at least $175 million of retrocession against U.S. named storm losses.
The Case for Longevity-Indexed Variable Expiration Bonds
We suggest governments should create Longevity-Indexed Variable Expiration (LIVE) bonds. These bonds, targeted to individuals (and institutions) would pay income-only, and start paying only after the average life-expectancy of the economy (having addressed retirement income through life expectancy with a complementary BFFS/SeLFIES bond). Each bond will be cohort specific and based on tax collections of that cohort. In this fashion, the government is fully hedged (because the bond will be a form of a collateralized debt obligation), and hence a natural issuer, with low credit risk.
New Solutions to an Age-Old Problem: Innovative Strategies for Managing Pension and Longevity Risk
The recent wave of innovation in the pension and longevity risk transfer market is barely a decade old, but more than U.S. $470 billion in global transaction activity has taken place, mainly in the United Kingdom, the United States, Canada, and the Netherlands. The main deals have been buy-outs, buy-ins, and longevity swaps for pension schemes. Similar derisking solutions have spread to the market for insured annuities. But transactions must be simplified, standardized, and made available to all pension schemes, regardless of size. They must also cover younger deferred scheme participants, as well as those in collective schemes where intergenerational risks are important. New investors must be brought in, and one way of doing this is via sidecars. Capital relief is important in reducing the costs of insurance-based solutions, such as those involving tail-risk protection; regulators need to become more comfortable with such deals.
Sierra parametric quake cat bond may grow 50% to $225m for mortgage investor
The Sierra Ltd. (Series 2019-1) catastrophe bond deal, that seeks parametric U.S. earthquake protection for an investment manager’s portfolio of mortgage related assets, has a new upsized target, now aiming to secure up to 50% more, or $225 million, of coverage for the sponsor.
Canada Life Reinsurance enters into €12bn longevity risk reinsurance agreement with Aegon
Canada Life Reinsurance has entered into a long-term longevity reinsurance agreement with Aegon covering €12 billion of in-force liabilities. Close to 200,000 of in-payment and deferred pensioners will be reinsured by Canada Life Reinsurance under this agreement.
Domtar To Transfer C$461 Million Of Canadian Pension Obligations Through Group Annuity Contracts
Domtar has entered into an agreement with Sun Life to purchase group annuity buy-out contracts to transfer C$360 million in obligations and related assets from its DB pension plans in Ontario. In addition, Domtar will convert approximately C$101 million of existing buy-in annuities with existing insurers into buy-out annuities to complete the full transfer of these obligations. No cash contributions will be required by Domtar.
Senate approves spending package with SECURE Act attached
The US Senate approved the Setting Every Community up for Retirement Enhancement (SECURE) Act of 2019, which includes a safe harbor provision that will allow pension plan sponsors to select insurers to provide guaranteed income solutions, and then protect those sponsors from liability should participants or their beneficiaries suffer losses due to the insurer’s inability to satisfy its financial obligations under the contract terms.
Munich Re lists $54.6m Eden Re sidecar tranche, preps Leo Re renewal for PGGM
Global reinsurance firm Munich Re is in the midst of issuing its collateralised reinsurance sidecar arrangements for 2020, with the first $54.6 million tranche of Eden Re II Ltd. Series 2020-1 notes and the first slice of a Leo Re Ltd. 2020-1 private sidecar arrangement for Dutch pension fund investor PGGM.
On December 20, 2019 President Trump signed the Setting Every Community up for Retirement Enhancement (SECURE) Act of 2019, which includes a safe harbor provision that will allow pension plan sponsors to select insurers to provide guaranteed income solutions, and then protect those sponsors from liability should participants or their beneficiaries suffer losses due to the insurer’s inability to satisfy its financial obligations under the contract terms.
Longevity swap market records could be broken in 2020: WTW
Willis Towers Watson says that the longevity swap market could see a record volume of transactions in 2020 as market conditions look set to make hedging longevity risk particularly conducive, while insurance and reinsurance capital abundant and appetite for large longevity risk transfer deals high.
