Aon Retirement Plan completes £510m buy-in
The Aon Bain Hogg Pension Scheme section of the Aon Retirement Plan has completed a £510m pensioner buy-in with Scottish Widows, the plan’s fourth pensioner buy-in and the second for the section.
Hamilton's Easton Re cat bond priced 16% below mid-point of guidance
Bermuda based insurance and reinsurance holding company Hamilton, completed its first full, syndicated Rule 144a catastrophe bond transaction using its newly incorporated Easton Re Pte. Ltd. special purpose reinsurance vehicle domiciled in Singapore. The $150 million of Series 2020-1 Class A notes, covering losses from U.S. named storms and earthquakes, across three years, on a state weighted industry loss and per-occurrence trigger basis, was priced at the low-end of its already reduced guidance (4% versus the initial guidance of 4.5% to 5%).
Maersk scheme completes £1.1bn buy-in with L&G
The Maersk Retirement Benefit Scheme has agreed to a £1.1bn buy-in with Legal & General, covering the benefits of 1,900 deferred members and 3,000 pensioners. The scheme trustees took a number of steps to derisk the scheme in recent years, including fully hedging its interest rate and inflation exposures, which allowed the pension fund to take advantage of an opportunity to enter this bulk annuity transaction.
2021 to be the busiest year yet for bulk annuities: Mercer
Mercer, the global consulting subsidiary of broking and advisory firm Marsh & McLennan, is expecting a continued growth of risk transfers during 2021, with close to £60 billion of bulk annuities, longevity swaps and new risk transfer solutions projected. 2020 risk transfers are expected to reach £50 billion, demonstrating the industry’s resilience to pandemic headwinds and volatile financial markets.
Munich Re in first Eden Re II reinsurance sidecar renewal for 2021
Munich Re has now completed the issuance of a first set of notes from its fully collateralized reinsurance sidecar vehicle Eden Re II Ltd. for this January renewal season, with a $55.1 million tranche of Series 2021-1 notes sold to investors. These quota share arrangements provide capital that helps to drive growth and also moderate PML’s, while providing attractive fee income opportunities and enabling the reinsurer to better manage its exposures, particularly in property catastrophe risks, by sharing in the risks and returns of its portfolio with capital market investors.
Cat bonds set for busy 2021, up to $12bn forecast by broker dealers
Catastrophe bond market activity will remain busy through 2021, with an expectation that issuance could reach as much as $12 billion, so beating the record set this year, as the high number of maturing cat bonds are seen as likely to be renewed and more new sponsors may also be seen. The catastrophe bond and related insurance-linked securities (ILS) market saw a record number of transactions in 2020, which drove issuance of pure 144A property catastrophe bonds above $10 billion for the first time ever and issuance of cat bonds and related ILS transactions has now surpassed $16 billion.
Phoenix 1 Re, a Singapore SPRV, in $42.14m private ILS issuance
A new Singapore domiciled insurance-linked securities (ILS) transaction has come to light, after a recently registered Special Purpose Reinsurance Vehicle named Phoenix 1 Re Pte. Ltd. issued and listed almost $42.14 million of private ILS notes. However, little is known about the details.
Record catastrophe bond year ends with busy Q4 2020
Catastrophe bond issuance reached record levels in 2020 and the busy year was topped-off with a record fourth-quarter as well, as the market demonstrated its resilience and ability to expand its relevance. Catastrophe bond and ILS issuance reached a $6 billion in Q4 2020. Combined with the previous three quarters, the record-breaking level of both transactions and issuance in Q4 drove annual issuance to $16.4 billion, another record. Although $4.3 billion of mortgage insurance risk helped annual issuance in 2020 reach new heights, for the very first time, cat bonds covering property catastrophe risks exceeded $11 billion, which is yet another record for the sector.
Bulk annuities growth dependent on ‘jumbo’ deals and consolidators
While the UK bulk annuity market is expected to continue to thrive in 2021, its significant growth will depend on ‘jumbo’ deals and on the development of the consolidators’ market, according to Aon. More than £50bn of pension scheme liabilities were transferred to insurers and reinsurers in 2020. With the Pensions Regulator launching an interim regulatory framework for commercial defined benefit consolidators in June 2020, the interest from schemes in superfunds is growing, with the first transaction expected to take place in 2021. https://www.aon.com/getmedia/110f3c38-1dab-4a32-ae1a-92f455fe3c89/Risk-Settlement-2020-market-review.aspx
MS Amlin behind Phoenix 1 Re, the first Asian cat risk focused sidecar
It turns out that MS Amlin was the sponsor behind the recently completed Phoenix 1 Re Pte. Ltd. (Series 2021-1) collateralised reinsurance sidecar transaction, which appears to have been the first sidecar to be solely focused on Asian property catastrophe risks.
MetLife reinsured $2bn of longevity risk for L&G in 2020
MetLife completed four UK based longevity reinsurance transactions with Legal & General in 2020. The agreements saw it providing reinsurance to Legal & General to cover the longevity risk associated with roughly $2 billion of combined pension liabilities. Met Life entered into its first longevity reinsurance transaction in the UK with Pension Insurance Corporation (£280 million), then followed up with a second with Rothesay Life ($320 million).
Alternative capital hit $92bn as reinsurance returned to pre-pandemic high: Aon
According to Aon, global reinsurance capital levels returned to their pre-pandemic high at $625 billion by the end of September 2020, comprised of $533 billion of traditional reinsurance capital at a new high of $533 billion, and $92 billion of alternative reinsurance capital (collateralized reinsurance, catastrophe bonds, reinsurance sidecars and other instruments such as industry loss warranties). http://thoughtleadership.aon.com/Documents/20210105-rmo-january.pdf
Munich Re reinsurance sidecar Eden Re shrinks to $235m for 2021
Munich Re has now completed the usual two tranche issuance for the renewal of its fully collateralized reinsurance sidecar vehicle Eden Re II Ltd., with the amount of capital backing the sidecar for 2021 down some 18% at $235 million.
Aetna returns for twelfth Vitality Re health insurance ILS, targets $200m
Aetna is back in the insurance-linked securities (ILS) market with what will be the firms twelfth annual sponsorship of a Vitality Re, health insurance linked catastrophe bond structure, seeking $200 million of reinsurance from a four-year two-tranche Vitality Re XII Ltd (Series 2021) transaction. The Vitality Re series use a catastrophe bond structure to transfer certain risks associated with health insurance medical benefit claims levels to capital markets, with a pay-out trigger based on an index linked to Aetna’s medical benefit claims ratio.
Marie Curie scheme completes £30m buy-in
The £30.8m Marie Curie Cancer Care Pension Scheme has agreed a full-scheme bulk annuity transaction worth around £30m with Legal & General. The transaction, agreed in early January, secures the benefits of more than 300 retirees and deferred pensioners.
Hannover Re's vehicle Kaith Re issues $76.4m of Seaside Re cat bond lites
Global reinsurance company Hannover Re has facilitated more private catastrophe bond transactions around this Janaury 2021 renewals, with the firms Kaith Re transformer having issued $76.4 million of Seaside Re cat bond lite notes, across seven transactions.
Peak Re renews Lion Rock Re sidecar for 2021
Peak Re has renewed its collateralised reinsurance sidecar vehicle Lion Rock Re Ltd. for the third year in succession. At this stage, the total size of Peak Re’s reinsurance sidecar renewal for 2021 is not known with certainty, but a first almost $15.62 million slice of Series 2021-1 notes issued by Lion Rock Re Ltd. has now come to light.
CCR Re renews 157 Re sidecar for 2021, invests collateral in EBRD bonds
CCR Re, the French state-owned reinsurance firm, has renewed its 157 Re collateralised reinsurance sidecar vehicle for 2021 at an unspecified size. It’s its third annual issuance of the 157 Re reinsurance sidecar from CCR Re, which remains the first and only insurance-linked securities (ILS) vehicle to be governed by French law. For the first time, the 157 Re sidecar has all of its collateral invested in bonds issued by the European Bank for Reconstruction and Development (EBRD), which it notes is the first time a sidecar has used such assets for collateral.
Hannover Re lifts Seaside Re catastrophe bonds to $136.4m for 2021
Hannover Re has facilitated another three Seaside Re private one-year catastrophe bond transactions around this January 2021 renewals, taking the total seen to $136.4 million across ten transactions. Hannover Re’s transformer vehicle Kaith Re Ltd. has acted on behalf of its segregated account named Seaside Re for each issuance. The Seaside Re program provides ILS investors with a mechanism to access certain U.S. property catastrophe risks in cat bond lite securitised form.
Eclipse Re private cat bond platform in $80m deal, its first of 2021
Eclipse Re has brought its first deal to market of 2021, an $80 million Eclipse Re Ltd. (Series 2021-01A) two-year issuance. Last year, the Eclipse Re platform was responsible for almost $107 million of listed private cat bonds, or cat bond lites, during the year, which was down on 2019’s roughly $300 million of deals.
Vantage launches collateralized insurer AdVantage Retro I Ltd. in Bermuda
Vantage Risk, the insurance and reinsurance start-up launched by industry veterans Greg Hendrick and Dinos Iordanou, has established its first insurance-linked securities (ILS) vehicle in Bermuda, a collateralized insurer class company named AdVantage Retro I Ltd.
Catastrophe protection gap hit 64% in 2020, $171bn goes uninsured: Aon
The global catastrophe protection gap reached 64% in 2020 as roughly $171 billion of natural catastrophe and severe weather losses were not covered by insurance and reinsurance, one of the largest brokers Aon has said.
Sierra parametric cat bond hits $200m, prices 14% down on guidance
The second parametric U.S. earthquake catastrophe bond Sierra Ltd. (Series 2021-1), sponsored by specialist mortgage security focused investment manager Bayview Asset Management, LLC, has now been successfully upsized to $200 million, while pricing for each of the two tranches of notes has settled at the bottom end of reduced guidance. The note's two tranches will provide earthquake insurance protection across California, Oregon, South Carolina and Washington, with coverage on a parametric trigger and per-occurrence basis across a three year term.
L&G scheme secures £400m derisking transaction
The Legal & General Group UK Senior Pension Scheme completed an assured payment policy transaction worth around £400m with the Legal & General Assurance Society in December 2020. The transaction was structured around the scheme’s existing buy-in arrangements with L&G. This tailored approach provides enhanced certainty for the scheme to reach a buyout within its planned timeframe.
Jamaica: World Bank cat bond still underway. Gets CCRIF rainfall payout for Zeta & Eta
Jamaica continues to work with the World Bank on a first catastrophe bond for the country the Finance Ministry has said and reflecting the importance of disaster risk financing, in recent weeks it has received a roughly $3.5 million payout under its parametric CCRIF insurance coverage.
Aberdeen City Council Transport Fund completes first buy-in
The circa £300m Aberdeen City Council Transport Fund has secured roughly three-quarters of its liabilities through a buy-in with pensions insurer Rothesay Life. The fund, part of the £4.4bn North East Scotland Pension Fund, almost tripled in size after merging with the Strathclyde Pension Fund No.3 Fund at the end of 2019.
Aetna's twelfth Vitality Re health ILS to price at top of guidance
The pricing on Aetna’s twelfth and $200 million health insurance linked ILS deal, the Vitality Re XII Ltd (Series 2021) transaction, is likely to settle at the top-end of guidance.
FEMA sponsors fourth FloodSmart cat bond, targets $350m+ of reinsurance
The U.S. Federal Emergency Management Agency (FEMA) returned to the insurance-linked securities (ILS) market for its fourth catastrophe bond issuance, a currently $350 million FloodSmart Re Ltd. (Series 2021-1) two-tranche transaction, seeking additional flood reinsurance coverage from the capital market for its National Flood Insurance Program (NFIP). The protection will, as with all the other FloodSmart Re catastrophe bonds, be across a three-year term and on an indemnity and per-occurrence trigger basis.
Dennis Leech on valuations, USS and the cost of prudence
"Open and closed schemes should be managed differently in terms of investment strategy. It should not be necessary for an open scheme like the USS to go down the de-risking route yet that is precisely what is being done."
Pacific Alliance hopes to expand cat bond to cover cyclones, floods, droughts
The Pacific Alliance, a Latin American trade bloc made up of Chile, Colombia, Mexico and Peru, would like to expand on the coverage provided by their catastrophe bonds, with hydro-meteorological risks including tropical cyclones, drought, floods and even cold weather all mooted as potential perils to include.