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The secondary market prices for the Vitality Re series of health insurance-linked securities (ILS) transactions have all been discounted on the potential for the ongoing Covid-19 coronavirus pandemic to drive an elevated level of medical benefit claims through to insurer and sponsor Aetna.

The forced closure of businesses nationwide because of the novel coronavirus would seem to be the perfect scenario for filing a “business interruption” insurance claim. But most companies will probably find it difficult to get an insurance payout because of policy changes made after the 2002-2003 SARS outbreak, according to insurance experts and regulators.

As a result of the COVID-19 crisis, the Canadian Office of the Superintendent of Financial Institutions has implemented a full freeze on portability transfers and annuity purchases relating to defined benefit provisions of pension plans. Buy-out annuities will require federally regulated pension plans to seek regulatory consent before purchasing buy-out annuities. However, this change only applies to buy-out annuities – no consent is required to purchase buy-in annuities.

"There is a chance that reinsurance and retrocession buyers begin to favour fully collateralised protection more highly again, as they become increasingly aware that there are financial and economic risks which of a scale that can threaten traditional re/insurer solvency."

The Horseshoe managed private catastrophe bond and insurance-linked securities (ILS) issuance and risk transformation vehicle Eclipse Re Ltd. has completed a second issuance of 2020, a $20 million Eclipse Re Ltd. (Series 2020-02A) transaction that came to market around the April reinsurance renewal.

"[The World Bank pandemic bond] was more a sort of attention-getting initiative to try to innovate in this space, but it was not needed and it did not work."

The highly contagious coronavirus outbreak, deemed a pandemic a month ago by the World Health Organization and the cause of a global economic downturn, is not enough to trigger payouts from the World Bank’s pandemic bonds, an independent arbiter decided.

The World Bank issued pandemic catastrophe bonds, as well as the pandemic risk-linked swaps that were issued at the same time, have not yet been triggered by the Covid-19 coronavirus pandemic as the growth rate hasn’t reached the necessary level to breach the parametric trigger.

For the billions of longevity swaps already in existence, the uptick in UK deaths means pension schemes will likely have to post more collateral to the re-insurers that provide these swaps if mortalities increase faster than models underpinning the transactions had predicted.

While the immediate outlook for the longevity swap market is expected to be an on-hold status, as pensions and their consultants wait to see the full impacts of the pandemic, this could result in a much more active year in 2021 as things settle down and the forward-looking mortality rate is better understood.

Draft legislation to form a U.S. Federal government backed reinsurance program for pandemic insurance claims is under discussion in the halls of power, with a bill perhaps ready to be submitted to the House before the end of this month.

Hymans Robertson’s analysis further warned that schemes looking to transfer longevity risk in isolation through a longevity swap should hold fire until the full impacts of Covid-19 on longevity are fully understood.

SCOR has quickly relaunched its delayed Atlas Capital Reinsurance 2020 DAC (Series 2020-1) catastrophe bond transaction, bringing it back to market at a slightly smaller size of $150 million, but with pricing boosted to better compensate and attract investors.

The World Bank issued pandemic catastrophe bonds and pandemic risk-linked swaps have now been triggered and will pay out $195.84m, we’ve learned today, after the final trigger parameter of the growth-rate of coronavirus cases turned positive.

Catastrophe bond market liquidity continues to feel the effects of the coronavirus pandemic, with liquidity still slow as evidenced by another bid lists of cat bonds available for sale failing to fully trade.

The majority of analysts and observers do not believe that the reinsurance and insurance-linked securities (ILS) industry faces a tidal wave of business interruption claims as a result of the coronavirus pandemic. Ongoing legal action continues to push for claims to be honoured, but in the majority of cases adequate exclusions do exist and it is viewed as potentially fatal to the industry if these were overruled and a flood of claims forced through into property insurance policies.

Global reinsurance company Swiss Re is back with what will be its fourth catastrophe bond in less than one year, as it seeks another $200 million or greater of U.S. named storm retrocessional support from the capital markets with Matterhorn Re Ltd. (Series 2020-3).

Alternative reinsurance capital, for deployment into insurance-linked securities (ILS), collateralised contracts and catastrophe bonds, returned to outright growth in the fourth-quarter of 2019, ending the year up 2% on the prior quarter, but still -2% down on the end of the previous year.

The New York Metropolitan Transportation Authority (MTA) has returned to the catastrophe bond market for the third time, seeking to sponsor an at least $100 million renewal of its soon to mature parametric cat bond coverage with a new MetroCat Re Ltd. (Series 2020-1) transaction.

Attributing a single event to climate change remains difficult at present but the long-term trend is clear: natural catastrophes are becoming more frequent and the intensity of certain perils is also estimated to increase. Guy Carpenter’s new report, Protecting our Planet and the Public Purse, highlights the expected geographic distribution of public sector risks as global temperatures increase.

The maturity dates for two private catastrophe bonds that were issued through the Willis Towers Watson operated Resilience Re Ltd. platform have been extended by another year, to allow for ongoing development of losses to the subject business.

SCOR, the global reinsurance company, has successfully priced its latest catastrophe bond Atlas Capital Reinsurance 2020 DAC (Series 2020-1) at its original target size of $200 million, but with pricing now at the top-end of an elevated guidance range.

A letter to APS members from the scheme secretary late last month reveals that the decision to shrink the board from 12 members to eight was justified with reference to its £4.4bn buy-in with Legal & General in September 2018, which is expected to reduce its workload. And with the funding level in APS showing a surplus, BA is not currently required to make contributions to APS.

Demand for buy-ins and buyouts is predicted to average £37bn a year for the next decade, according to new analysis. Hymans Robertson’s projections would see half of all defined benefit schemes transfer their entire liabilities to bulk annuity providers, known as a full buyout, in the next 20 years.

Payments from the World Bank’s Pandemic Emergency Financing Facility (PEF) to member countries of the International Development Association (IDA) could begin as early as next week, as the capital lost by holders of the triggered pandemic catastrophe bonds and swaps looks set to be mobilised rapidly.

A spike in the UK mortality rate due to Covid-19 could raise concerns for defined benefit pension schemes that have implemented longevity hedging, as it could trigger collateral calls on their longevity swaps.

While the UK TPR guidance encourages a flexible approach to triennial valuations and recovery plans, it cautions that companies pausing contributions should not restart dividend payments to shareholders until they have put their pension schemes back on track to meet their long-term goals.

The latest catastrophe bond to be sponsored by reinsurance firm Swiss Re has been successfully upsized 7.5% at pricing, we can reveal, with the Matterhorn Re Ltd. (Series 2020-3) transaction now set to secure the company $215 million of U.S. named storm retrocession.

Florida Citizens, the state-supported insurer of last resort, is back in the catastrophe bond market for what will be its seventh issuance, seeking support for a $300 million or greater Everglades Re II Ltd. (Series 2020-1 & 2020-2) deal that will also expand coverage to the Citizens personal lines account for the first time.

The latest catastrophe bond to be sponsored by non-profit state mandated insurer of last resort Louisiana Citizens Property Insurance Corporation has been successfully upsized 20%, with the Catahoula Re Pte. Ltd. (Series 2020-1) now a $60 million transaction.