ART

Florida focused insurer Avatar Property and Casualty Insurance Company has returned to the catastrophe bond market for what will be its second ever issuance, with a currently $65 million Casablanca Re Pte. Ltd. (Series 2020-1) transaction to provide named storm reinsurance protection.

U.S. primary insurance giant Allstate has successfully increased the size of its new catastrophe bond transaction by one-third, with the Sanders Re II Ltd. (Series 2020-2) cat bond deal now featuring $200 million of notes.

Florida’s Citizens Property Insurance Corporation has opted to slightly upsize its remaining Personal Lines Account tranche of its new catastrophe bond issue, with the Everglades Re II Ltd. (Series 2020-2) deal growing by 10% to $110 million by pricing.

Canada Life Reinsurance took EUR 5.3 billion of the long-term longevity risk associated with EUR 13.5 billion of in-force liabilities of NN Life’s portfolio, in the recently completed longevity swap and reinsurance arrangement.

Over the past few years, demand for pensions insurance has swelled as schemes were enticed with cheaper and cheaper offers for offloading their liabilities. Now this already booming market for buy-in and buyout deals has received a two-pronged boost from the coronavirus pandemic: the turmoil rippling through the economy is providing schemes with the best ever pricing for insurance, just as the demand for shedding investment risk is at its greatest.

Demand for reinsurance sidecar capacity is perhaps as high as it has ever been, with a number of renewal structures in the market, as well as some completely new sidecar proposals. However, with investor confidence dented by the Covid-19 pandemic, sponsors are struggling to find adequate investor support. Also, some investors are also more wary of quota share structures after facing losses during the last three catastrophe heavy years.

U.S. primary mutual insurer USAA has elected to withdraw the riskier tranche from its newest Residential Reinsurance 2020 Limited (Series 2020-1) catastrophe bond transaction and despite aiming to slightly upsize the remaining lower-risk layer of the issuance has now settled for $100 million of coverage, we understand.

Allianz Risk Transfer, a specialist and alternative risk focused unit of the Allianz global insurance and reinsurance group, is back in the catastrophe bond market with a $100 million Blue Halo Re Ltd. (Series 2020-1) transaction, the first by the issuer in four years.

Private equity and infrastructure group 3i has announced a £650m buy-in with Legal & General. The deal is the latest in a string to be completed by 3i’s defined benefit pension scheme since its first buy-in in 2017. The company announced it had begun an exercise to explore the possibility of a full buyout for the circa £1bn plan in its recently released annual report.

The defined benefit scheme of the British Bankers’ Association has entered into a £95m buy-in agreement with insurer Aviva, covering 213 members’ benefits. The comparatively slight transaction reveals ongoing appetite for bulk annuity insurers to write smaller contracts.

The Texas Windstorm Insurance Association (TWIA) has lifted its target for the recently launched Alamo Re II Pte. Ltd. (Series 2020-1) catastrophe bond issuance, with as much as $400 million of reinsurance capacity from the capital markets now on the cards.

For insurance-linked securities (ILS) contracts and structures that have exposure to potential losses from the Covid-19 corornavirus pandemic, the chances are that their capital and collateral could be trapped for a prolonged duration, executives from RenaissanceRe have suggested.

While the number of transactions under £100m fell by 30 per cent to 106 in 2019 from 150 in 2014, a sharp uptick in the number of schemes looking to take advantage of attractive insurer pricing has led LCP analysts to predict that 2020 will prove a strong year for smaller schemes.

"Pensions & Investments has reported more than $200 billion in defined benefit liabilities moving to insurers from plan sponsors over the past decade. The market has had more than 30 insurance companies participate. However, the majority of the buy-ins and buyouts have been concentrated in five insurers. In addition to liability transfers, more than $100 billion of longevity risk has been assumed by insurance companies. Prudential accounts for almost one-third of all activity."

The UK Pensions Regulator is to issue new guidance on defined benefit employers seeking to use third-party investors to back the cost of buyout, following the completion of a first-of-a-kind "capital-backed journey plan" deal without the need for regulatory clearance. It is an agreement that enshrines at the outset a fixed cost to the sponsor, as well as a future date for the full buyout of benefits. Unlike "bridge to buyout" consolidator Clara Pensions, the link to the sponsoring employer is not cut.

The Texas Windstorm Insurance Association’s (TWIA) new Alamo Re II Pte. Ltd. (Series 2020-1) catastrophe bond issuance has successfully been doubled in size thanks to strong demand from investors and will now provide the residual market property insurer $400 million of reinsurance protection.

U.S. primary insurance carrier State Farm has returned to the capital markets to source fully collateralised reinsurance again, sponsoring a new $250 million another privately placed and issued Merna Re II Ltd. (Series 2020-1) catastrophe bond transaction.

Guide pricing for Avatar Property and Casualty Insurance Company’s new $65 million Casablanca Re Pte. Ltd. (Series 2020-1) catastrophe bond issuance has been hiked by 16%-18%, as insurance-linked securities (ILS) investors continue to demonstrate their requirement for higher returns and cat bond rates reflect the hardening Florida reinsurance market.

Dutch headquartered European market focused insurance group Achmea has returned to the catastrophe bond market to sponsor a roughly $90 million Windmill II Re DAC (2020) transaction, which will be the companies third cat bond transaction.

Avatar Property and Casualty Insurance Company’s new $65 million Casablanca Re Pte. Ltd. (Series 2020-1) catastrophe bond issuance has been amended so that the notes will now be issued at a discount to par, with the implication being a higher premium being offered to investors, it seems.

This year's Insurance Linked Securities for Institutional Investors Report covers the impact that climate change is having on ILS and the way that investors are navigating this space in search of viable opportunities that can yield them net-positive returns.

Swiss Re has again returned to the catastrophe bond market for what will be its fifth time in just around one-year, this time bringing a targeted $200 million Matterhorn Re Ltd. (Series 2020-4) with which it hopes to secure retrocessional protection against hurricane losses.

The new Herbie Re Ltd. (Series 2020-1) catastrophe bond transaction that is sponsored by specialty insurance and reinsurance firm Fidelis Insurance Holdings Limited has successfully been upsized by the target 25% to reach $125 million of coverage for the company.

The insurance and reinsurance industry in Germany has reportedly come together to discuss and strategise the launching of a EUR 10 billion pandemic risk fund, to provide risk capital in the event of future pandemics, with insurance-linked securities (ILS) one of the funding avenues being explored, it has been reported.

The target for the new Blue Halo Re Ltd. (Series 2020-1) catastrophe bond transaction from Allianz Risk Transfer has been lifted by 50% to $150 million, while the pricing has moved towards the upper-end of guidance.

European insurer Achmea is hoping to increase the size of its new Windmill II Re DAC (2020) catastrophe bond transaction by as much as 25%, with the offering now targeting up to EUR 100 million (US $113m) of reinsurance protection for the company.

The term of Avatar Property and Casualty Insurance Company’s latest catastrophe bond was shortened to one year just before its issuance, as the insurer settled for a single year of reinsurance coverage from the $65 million Casablanca Re Pte. Ltd. (Series 2020-1) transaction.

As well as enhancing their returns thanks to rising pricing, insurance-linked securities (ILS) fund managers are seeking to capitalise on the hardening reinsurance and retrocession market in a number of other ways that could result in their portfolios delivering better returns and becoming less volatile.

The target size for Allianz Risk Transfer’s (ART) new Blue Halo Re Ltd. (Series 2020-1) catastrophe bond transaction has been lifted again, with the deal now aiming to secure up to $175 million of retrocession for the firm’s portfolio and some of the tail risks related to the ILS fronting it undertakes. Also, the pricing has moved towards the upper-end of guidance.