This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

Following the successful completion of its second catastrophe bond, the $50 million Black Kite Re Limited (Series 2025-1), Franz-Josef Hahn, CEO of reinsurer Peak Re, told us the issuance showcases the “tremendous potential” that insurance-linked-securities (ILS) solutions can play in narrowing protection gaps across Asia.

The Hong Kong headquartered global reinsurer returned to the catastrophe bond market in April, initially aiming to secure $50 million or more in retrocessional reinsurance from this Black Kite Re 2025-1 deal.

In late April, we reported that Peak Re had managed to successfully secure the targeted $50 million size, while the pricing of the notes were finalised at the upper-end of the initial guidance.

Issued via Hong Kong-based special purpose insurer (SPI), Black Kite Re, Peak Re’s latest cat bond builds on the success of the company’s debut cat bond from 2022, and according to Hahn, deepens the firm’s ability to “pioneer innovative risk transfer solutions for the Asia-Pacific region.”

The $50 million Black Kite Re 2025-1 issuance covers Japanese earthquake and typhoon risks on an industry loss trigger and per-occurrence basis for Peak Re, as well as the additional cover for Chinese and Indian earthquake risks on a parametric basis, all across a three-year period from issuance in late April.

“This latest transaction reflects our commitment to meeting the evolving needs of cedants and creating value for investors by introducing new risks and structures tailored to the region’s unique challenges. It represents another step forward in our mission to strengthen resilience for our clients and their communities,” Hahn explained.

He continued: “Our primary motivation for this issuance was support our growth ambitions in key markets.  In addition, we expect Black Kite 2025-1 to help our regulatory solvency requirements under Hong Kong’s Risk Based Capital regime. By securing collateralized retrocession capacity, Peak Re enhances its balance sheet resilience and ensures long-term sustainability.”

Hahn also highlighted how Black Kite Re 2025-1 introduces new perils, particularly the first-ever use of Indian earthquake risk in a 144A cat bond format, marking a significant step that expands opportunities for both issuers and investors.

“This issuance underscores our focus on developing markets, particularly in Asia and its emerging markets, where Peak Re is based and protection gaps persist despite increasing catastrophe exposures,” Hahn added.

Sascha Bruns, Head of Global Retrocession at Peak Re, highlighted the importance of the deal’s geographic breadth: “The inclusion of Indian earthquake risk in a 144A catastrophe bond is a market first, reflecting our deep understanding of the region’s risks and our confidence in the underlying data. By combining developed markets like Japan with emerging markets such as India and China, Black Kite Re II offers a unique diversification opportunity for investors.”

As mentioned, the inclusion of Indian earthquake risk in a 144A catastrophe bond is a first for the market, representing a major development in expanding risk transfer solutions across Asia.

Bruns also went on to explain that in order to ensure transparency and swift payouts in regions where data quality has seen meaningful progress, Peak Re opted for parametric triggers for both Indian and Chinese earthquake risks.

Bruns noted that this structure underscores Peak Re’s capacity to bring untapped risks to the global ILS market, helping to address persistent protection gaps in underinsured areas of Asia.

For the Japanese exposures, typhoon and earthquake, Bruns explained that the cat bond uses industry loss triggers, which offer broad coverage, including for secondary effects such as heavy rainfall, tsunamis, and fire-following events.

While for India and China, parametric triggers were selected based on Peak Re’s confidence in its understanding of local seismic risk.

Another key factor to highlight is that this Black Kite Re Limited (Series 2025-1) deal marks the first reuse of a Hong Kong SPI structure, a move designed to enhance operational efficiency and strengthen Hong Kong’s position as a regional hub for ILS activity.

“Black Kite Re II reflects Peak Re’s commitment to innovation in the catastrophe bond market. By being the first reuse of a Hong Kong SPI and in combining multiple perils and territories, we’ve created a structure that balances security, efficiency, and diversification,” said Iain Reynolds, Head of Third-Party Capital at Peak Re.

He added: “This issuance reinforces Hong Kong’s position as a growing ILS hub and demonstrates Peak Re’s ability to deliver tailored solutions to investors that ultimately help us serve our cedants.”

In addition, Reynolds states that Black Kite Re II underscores Hong Kong’s growing position as a competitive centre for ILS activity.

Reynolds also credited the Hong Kong Insurance Authority’s support for facilitating a smooth issuance process and helping advance the development of new structures in the cat bond market.

Furthermore, Hahn added that the transaction reflects the growing maturity of Asia’s ILS sector and its capacity to narrow protection gaps.

“Black Kite Re II showcases the tremendous potential of ILS solutions in narrowing protection gaps across Asia. By integrating developed and emerging markets, we’ve created a diversifier that supports the long-term growth of the region’s insurance and reinsurance sectors. This issuance also demonstrates the increasing maturity of Hong Kong’s ILS market, which we believe will continue to play a key role in driving innovation globally.”

He concludes: “Black Kite Re II is not only a testament to Peak Re’s innovative approach but also a significant milestone for the global ILS market. Its introduction of Indian earthquake risk, multi-territory coverage, and the reuse of a Hong Kong SPI highlight the evolution of catastrophe risk securitization in Asia.”

As a reminder, you can read all about this Black Kite Re Limited (Series 2025-1) catastrophe bond from Peak Re, as well as every other cat bond transaction in our extensive Artemis Deal Directory.

Black Kite Re II shows ILS can narrow Asia’s protection gap: Peak Re CEO was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

This video features an expert panel discussing the opportunity for investors in the growing casualty insurance-linked securities (ILS) space at our Artemis ILS NYC 2025 conference, which was held in New York on February 7th 2025.

ILS NYC 2025 was Artemis’ eighth catastrophe bond and insurance-linked securities (ILS) conference held in-person in New York and saw more than 425 registered attendees enjoying insightful debates from our expert speakers, as well as valuable networking opportunities throughout the day.

Attendees from across the globe assembled to hear thought-provoking insights from insurance-linked securities (ILS) market leaders, all under the theme of “Capturing opportunities (established & new).”

Our latest video from the Artemis ILS NYC 2025 conference features the fourth panel discussion of the day, which was on the emerging casualty insurance-linked securities (ILS) market where investors are accessing the returns of longer-tailed casualty insurance risks, titled: The casualty ILS investment opportunity.

The panel discussion was moderated by John Seo, Co-Founder, Managing Director, Fermat Capital Management.

He was joined by: David Ni, Chief Strategy Officer, Enstar Group; Andras Bohm, Head of U.S. Capital Solutions & Advisory, BMS Group; Amy Stern, Chief Executive, Reinsurance, Ledger Investing; and Bob Forness, CEO, MultiStrat Group.

While casualty insurance-linked securities (ILS) may seem nascent to some, the market has been in development for a number of years now. The panellists set the scene and explained what this segment of the ILS asset class is, as well as why casualty risks can be attractive investments.

This panel discussed the evolution and potential of the casualty insurance-linked securities (ILS) market, forecasting an opportunity to grow the segment from an estimated $3-4 billion current base to potentially exceeding $10 billion by 2026.

Key points in the discussion included the shift from catastrophe-focused ILS to casualty ILS, driven by improvements to the infrastructure of the ILS market, as well as investor interest in accessing new classes of insurance risk.

The casualty ILS market’s growth is largely attributed to risk sourced through whole account quota shares, which the panel said enable stable, diversified portfolios to be constructed for investors.

The discussion also highlighted the importance of exit solutions to provide investor certainty of liquidity, the need for strong partnerships, and that underwriting discipline is key to manage risks and ensure sustainable growth of the casualty ILS space.

Watch the full video of this casualty ILS market focused panel discussion at ILS NYC 2025 (embedded below), for unique insights into the developing casualty ILS market, what investors need to know about this asset class, and how cedents can benefit from access to efficient capacity from the capital markets.

More videos will follow in the coming weeks from our ILS NYC 2025 conference.

Artemis’ next confirmed conference dates will be (please save them): Artemis London 2025 on September 2nd 2025, and Artemis ILS NYC 2026 on February 6th 2026!

All of our Artemis Live video interviews have a focus on reinsurance, ILS and the efficiency of risk transfer and can be accessed directly from our Artemis Live page.

You can also listen in audio to these interviews by subscribing to the Artemis Live podcast here.

Our conferences provide exposure in front of a highly relevant, senior and specialised group of attendees. Plus you’ll benefit from exposure in front of our entire global readership, which averages more than 65,000 individuals every month.

For all enquiries regarding sponsorship opportunities for future Artemis events please contact events@artemis.bm.

Our conference sponsors for ILS NYC 2025 can be seen below. We thank them all for their valued support:

For all enquiries regarding sponsorship opportunities for future Artemis events please contact events@artemis.bm.

The casualty ILS investment opportunity – ILS NYC 2025 video was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

Robust catastrophe bond issuance in the first and now second quarter of 2025 seems to have taken some of the excess cash out of the market, leading to a little more firmness in pricing of late, K2 Advisors, the hedge fund focused investment management unit of Franklin Templeton has noted.

In the firm’s last quarterly updated K2 Advisors explained that meaningful catastrophe bond issuance was required to absorb excess cash in the marketplace.

One quarter on and it seems the investment manager has got its wish, as catastrophe bond issuance has been particularly brisk, with records being broken for new cat bonds coming to market year-to-date.

That brisk cat bond issuance has helped to absorb much of the cash that has been flowing from maturing deals, as well as from new inflows from cat bond fund managers.

K2 Advisors said, “Cat bond issuance has been strong. The market remains healthy and has exhibited some firmness as of late regarding spreads, as deals have priced within or higher than initial guidance in addition to getting upsized.”

Here, the investment manager is referring to the fact pricing has in fact been closer to guidance so far in Q2 than it was in Q1 this year.

In the first-quarter of 2025, new cat bond tranches issued priced almost 10% below their mid-points of initial guidance, on average.

But, in Q2 so far, Artemis’ data shows that the pricing trend is for just a -3.4% fall from guidance mid-points so far this quarter.

K2 Advisors believes this shows more firmness in the catastrophe bond market, which can often be one way a more balanced supply-demand in capital terms gets exhibited.

Of course, it can also mean the initial guidance was more realistic at the start of an offering, so less drastic price decreases are seen.

Discussing the fall-out from the California wildfires in Q1, K2 Advisors noted that a lot of the mark-to-market decline in cat bonds seen from the event was recovered, with most of the bonds that now remain marked-down having contributions from other natural catastrophe perils as well.

K2 Advisors commented, “Despite this severe event, the market remained robust with issuance, as new and returning sponsors are coming to the cat bond market to fulfill their capacity needs.

“Overall, primary issuance remains robust and seemingly firm as prior months of tightening in tandem with upsizing seem to have taken quite a bit of excess cash out of the market.

“Lastly, the secondary market is appearing to follow suit, as portfolio rebalancing early in the year is leading to healthy two-way flows between participants.”

Finally, looking ahead from Q2, K2 Advisors remains overweight the insurance-linked securities (ILS) asset class, in conviction terms. In terms of ILS market segments, the firm remains strongly overweight catastrophe bonds, private ILS (so collateralized reinsurance), and retrocession.

Strong cat bond issuance takes some excess cash out, prices a little firmer: K2 Advisors was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

The City National Rochdale Select Strategies Fund, a mutual insurance-linked securities (ILS) strategy focused on industry loss warranties (ILWs) and catastrophe bonds, delivered a net return of 11.77% for the year ended January 31, 2025.

While down from the 15.58% return recorded the previous year, 2024’s performance still marked a second consecutive year of strong, above-average gains for the interval-style fund.

Run by City National Rochdale, the fund combines structural customisation with tactical risk management across ILWs and cat bonds. As of the end of January 2025, total net assets reached $228.2 million, up from mid-2024 levels, reflecting continued investor interest in ILS as a source of uncorrelated returns amid broader market volatility.

“This year’s performance was the second year in a row with higher-than-average positive returns and the Fund’s sixth consecutive year generating positive, fundamentally non-correlated returns,” said Gregg Giaquinto, President of City National Rochdale.

According to Giaquinto, the fund’s defensive positioning ahead of a hyperactive 2024 hurricane season played a key role. Portfolio construction focused on more risk-remote attachment points and custom structures designed to reduce the risk of impairment from a single event. Exposure to risk was further hedged through the purchase of additional ILW protection.

“These improvements can be evidenced by the increase in loss-exposure breakeven points compared to past years,” Giaquinto explained. “The dynamic risk positioning exemplifies the ability to moderate through prudent underwriting and highlights the customizability of the ILW product.”

While catastrophe bond allocations were more modest in the portfolio, the fund still benefited from a record second year of primary market issuance in the cat bond space. However, the lighter weighting meant the fund slightly underperformed the Swiss Re Cat Bond Index, which returned +14.41% over the same period.

Even so, the Select Strategies Fund outpaced traditional cash proxies like the ICE BofAML 3-month U.S. Treasury Bill Index, which returned +5.19% for the year ended January 31st 2025.

It’s worth noting that this performance comes amid a strong overall year for the ILS market, which has seen continued investor demand, particularly for cat bonds and ILWs offering attractive risk-adjusted yields and structural clarity.

“The Fund’s portfolio construction process for 2025 is now well underway, and we are focused on diversification and capital-efficient opportunities in the ILW and Cat Bond markets, where we believe risk-adjusted returns are most attractive,” Giaquinto added.

“We are excited for the opportunity to further capitalize and source attractive opportunities for our shareholders in the coming months.”

Rochdale ILW & cat bond fund returns 11.77% with only modest catastrophe impacts was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

Acrisure Re, the reinsurance broking division of global firm Acrisure, has made some key hires in Bermuda, taking Roman Romeo, who joins the company as Head of Acrisure Re Bermuda, as well as Barry Gordon, a specialist in broking industry-loss warranty (ILW) instruments, from rival Aon.

Roman Romeo has been appointed as President, Head of Acrisure Re Bermuda, effective April 7th.

Based in Bermuda, Romeo will report directly to Michael Cross, President, Acrisure Re North America.

His hire represents a win for Acrisure Re, as the reinsurance broker has taken Romeo from a senior Bermuda leadership role at Aon.

Romeo became the chief executive officer (CEO) of Aon’s Bermuda Reinsurance Solutions unit just one year ago.

Prior to that, he was the Executive Managing Director, Wholesale Treaty for Aon Reinsurance Solutions in Bermuda.

At Acrisure Re, Romeo will have a mandate to scale the reinsurance broking business in Bermuda for the firm, while enhancing client service and building out the team on the island.

The company expects Romeo’s appointment will accelerate its ambitions to build-out a leading Bermuda reinsurance broking operation.

In addition, Acrisure Re has also hired Barry Gordon from Aon, who joins the company as Senior Vice President, ILW, effective April 15th.

Gordon is also based in Bermuda and will report to Romeo and lead Acrisure Re’s ILS trading capabilities, as part of an index-based product suite.

Gordon was most recently Vice President, ILW at Aon in Bermuda and he brings significant expertise in industry-loss warranties (ILWs), alongside broader experience in broking retrocession and reinsurance opportunities.

Simon Hedley, CEO, Acrisure Re Group, said, “The hiring of Roman represents a major milestone in Acrisure Re’s commitment to expanding its footprint and deepening its influence in the Bermuda market. His industry expertise, leadership acumen, and deep-rooted relationships on the Island will open countless doors and drive enormous value for our clients and partners.

“With Barry also joining the team, we are building a world-class platform that will firmly cement Acrisure Re’s standing in the market.”

Paul Scope, CEO, Acrisure Bermuda, added, “Bermuda remains an important market, and Acrisure’s decision to further invest here is both strategic and important.

“Roman’s appointment, alongside Barry’s, is a powerful signal of our intent to grow thoughtfully and meaningfully. I look forward to working alongside them and seeing the impact they will make in the months and years ahead.”

Romeo further stated, “Bermuda continues to play a critical role in the global reinsurance landscape, and I’m pleased to be joining Acrisure Re at a time of strategic focus on the Island. The existing team has strong expertise, and I look forward to collaborating with them—and with Barry—to strategically grow the portfolio and provide clients with tailored, analytics-driven solutions.”

Acrisure Re hires Romeo & ILW specialist Gordon from Aon in Bermuda was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

The Ambassador US mutual catastrophe bond fund strategy operated by advisor Embassy Asset Management has now expanded its insurance-linked securities (ILS) fund’s assets under management to $428 million, with expansion across the portfolio and more industry-loss warranty (ILW) investments made as well.

The Ambassador cat bond fund was launched in the third-quarter of 2021 by investment advisor Embassy, which has a focus on non-correlated strategies that deliver income to its clients.

With a dedicated catastrophe bond and insurance-linked securities (ILS) investment focus, Embassy was the newest entrant to the US mutual ILS fund marketplace at the time.

The strategy began allocating capital to catastrophe bonds in the quarter to April 30th of 2023, while also entering into its first private ILW arrangement under the Consulate Re structure.

After that, the Ambassador Fund benefited from growing investor interest and took more inflows into its catastrophe bond focused strategy through 2023 and 2024.

We last reported on this largely cat bond focused fund when it surpassed $329 million in assets under management (AUM) in October 2024.

Now, as of its last formal reporting of data for January 31st 2025, the Ambassador Fund’s total assets under management had reached almost $418 million.

Which is a more than doubling in size in one year, as the Ambassador cat bond fund had only $164 million in total net assets at January 31st 2024., representing impressive 155% growth in just twelve months.

We understand though, that the fund has continued to grow in recent weeks as well, reaching $428 million in net assets as of the end of February 2025.

The one-year rolling return appears to be running at around 11.67% as of the end of February, however like many cat bond funds the year-to-date appears more muted due to some price effects likely caused by the California wildfire impacts to certain positions, which has reduced the 12-month return.

In the last full-year of performance, to October 31st 2024, the Ambassador cat bond fund achieved a 13.5% return.

As of January 31st 2025, the Ambassador Fund counted $330.3 million of catastrophe bonds within its portfolio, while the preferred note investments into industry-loss warranty (ILW) contracts under Consulate Re amounted to just over $59 million, with the rest of the net assets comprised of short-term investments.

The Consulate Re private investments into ILW’s are a way for the Ambassador portfolio management team to source additional investments, then transform them to a structure suited to a mutual ILS fund strategy.

As we understand it, they are all transformed and securitized industry-loss warranties (ILW) arrangements and now, as of the January 31st reporting, the Ambassador Fund portfolio has 10 Consulate Re positions, 7 of which are 2025 series and so more recently invested in, it appears.

Ambassador mutual cat bond fund grows to $428m, more ILW investments made was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

Artemis has learned that Alex Mican, the Head of PCS Global Strategy and Growth at Verisk Claims, is departing the company.

We understand Mican is departing for a new role in the industry which we are told he begins soon.

PCS is an important provider of data to the catastrophe bond, insurance-linked securities (ILS) and industry-loss warranty (ILW) markets.

This data is used in triggers for industry-loss index based reinsurance and retrocession risk transfer arrangements, with the company acting as a reporting and calculation agent for transactions.

Mican had worked at Verisk since 2014, initially employed as a sales development analyst, then moving to the Property Claim Services (PCS) unit in 2016.

Since then, Mican had led the development of a number of new products at PCS, including the global specialty lines data services – most recently PCS Global Aviation.

In 2023, Mican was promoted into the role of Head of Global Strategy and Growth for PCS.

This position saw him leading all client-facing activity, as well as new product and market development.

Mican has also been the primary touchpoint for reinsurance and insurance linked securities (ILS) activities that PCS undertook since taking on the latest role at Verisk.

We understand the PCS service will not be affected, with Ted Gregory, Head of Global PCS Operations the most senior employee in the unit.

Head of PCS Global Strategy and Growth Alex Mican to depart Verisk was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

K2 Advisors, the hedge fund focused investment management unit of Franklin Templeton, continues to overweight most insurance-linked securities (ILS), but in its outlook for 2025 notes that meaningful catastrophe bond issuance is required to absorb cash in the marketplace.

The investment manager commented, “Following the continued spread tightening that was a dominant theme in the second half of 2024, catastrophe bonds printed another year of record issuance.

“This momentum looks to carry into 2025, with several transactions looking to settle in the first weeks of the year and more anticipated by mid-January. Overall, the market appears relatively healthy as the dense pipeline of issuance continues to absorb cash.”

But K2 Advisors highlights the softening of pricing seen in catastrophe bond issuance, saying, “spreads have remained relatively suppressed compared to the year prior as various bonds have priced below initial guidance.”

But adds that, “However, this has come on the back of the upsizing of programs—significantly in some cases—as sponsors were able to secure more capacity, alleviating some of the excess cash in the market following a successful year of fundraising across the industry.”

Looking to the outlook for the first-quarter of 2025, K2 Advisors notes the cat bond pipeline appears strong and the market has got off to a strong start in the new year.

“Current broker discussions are optimistic as the primary market is well positioned to bring meaningful size in the first few weeks of the new year, with various programs slated to be announced following market participants’ return from the holiday(s).

“Activity in the primary, in addition to end of year rebalancing, should have a knock-on effect for the secondary market, with volume potentially returning after several months of relatively low activity during the second half of 2024,” the investment manager explained.

But, adding a note of caution, K2 Advisors believes the pipeline needs to continue building to supply the new cat bond investment opportunities that fund managers require to absorb excess cash in the marketplace.

K2 Advisors said, “Overall, the market seemingly has too much cash heading into the new year, a situation that could potentially be remedied with meaningful issuance sizes as the market continues to be poised for growth.”

Across insurance-linked securities (ILS), K2 Advisors remains overweight the asset class in conviction terms, and remains strongly overweight catastrophe bonds, private ILS (so collateralized reinsurance) and retrocession.

But the ILS market segments have changed in order slightly in the K2 Advisors hedge fund strategy conviction ranking, with now retrocession at the top, followed by cat bonds and private ILS transactions.

K2 Advisors has stayed neutral in its conviction for industry loss warranty (ILW) investments and remains strongly underweight life insurance-linked security investments.

K2 Advisors says cat bond issuance must absorb cash, raises conviction on retro was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

With a widening crisis protection gap evident around the world there is a need for a transformational expansion in the use of insurance and reinsurance mechanisms to transfer risks to the capital markets, according to a report from the High-Level Panel on Closing the Crisis Protection Gap.

The report calls for a tenfold increase in the proportion of international crisis finance that is pre-arranged by 2035.

Here, insurance and risk transfer are called out as examples of pre-arranged crisis financing that can serve to transfer financial risks away from public balance sheets, into the private and capital markets.

“In a world where risks can be modelled with ever greater precision, we should not wait to react until a crisis occurs,” explained Co-Chair of the High-Level Panel Sir Mark Lowcock, a former United Nations Under-Secretary-General for Humanitarian Affairs and Emergency Relief Coordinator. “Nor can millions of people in vulnerable communities be left dependent on underfunded, ad hoc financial appeals where more effective financing instruments exist.”

Out of the $76 billion spent on crisis finance in 2022, below 2% of this was prearranged, according to research by the Centre for Disaster Protection, while just 1.4% of that reached low-income countries.

Highlighting the scale of the gap that requires financing, the report explains that annual global economic losses from unmitigated climate change are projected to range between $7 trillion and $38 trillion by 2050.

As a result, “The High-Level Panel is calling for a transformation in the level of effort dedicated to transferring risks from public balance sheets to capital markets.”

“With human and economic costs already mounting, the world cannot afford to continue treating crises as unexpected surprises,” said Arunma Oteh, Co-Chair of the High-Level Panel and a former World Bank Vice President and Treasurer. “This is not just about the quantity but also the quality of finance which is being provided. Reactive funding is too slow, too costly, and leaves the world needlessly exposed. Prearranged finance must become the default for all predictable and modellable crises, not the exception.”

The High-Level Panel explains that it is, “unequivocal that all forms of insurance are central to this transformation.

“With projected crisis costs projected even conservatively in the trillions annually by 2050, capital markets hold relatively untapped potential for securing essential public assets like roads, hospitals, and power grids, and for transferring enormous financial risks away from public balance sheets.”

Adding that, “The High-Level Panel considers options for pre-arranged financing to be becoming more feasible and applicable due to recent technical advances in financial technology, risk transfer instruments, and risk modelling, but their use is not yet growing commensurately.”

The evolution of the insurance and reinsurance industry, including the development of insurance-linked securities (ILS) instruments such as catastrophe bonds, are seen as key for delivering the pre-arranged crisis financing that is required.

“The High-Level Panel considers options for pre-arranged financing to be becoming more feasible and applicable due to recent technical advances in financial technology, risk transfer instruments, and risk modelling, but their use is not yet growing commensurately,” the report explains.

Instruments such as catastrophe bonds, “provide governments with immediate liquidity in the wake of a disaster, enabling rapid response without destabilizing national economies.

“Much of this innovation is driven by parametric insurance, where payouts are triggered by specific data points (e.g., wind speed or rainfall levels), eliminating the delays of traditional claims processes.”

At the same time, indemnity structures are also evolving, while blended finance approaches are securing contingent financing for those exposed to crises such as climate risks.

“This growing sophistication is helping to support long-term community resilience, reduce economic and social disruptions caused by disasters, and build stronger frameworks for managing crises effectively,” the report states.

There’s a clear role for insurance-linked securities (ILS) mechanisms as a structure for transferring crisis related risks to the capital markets, while insurance and reinsurance product design and techniques can be leveraged with the help of private market participants as well.

Of course, none of this is new or groundbreaking and we’ve been calling for greater use of capital markets structures and infrastructure, alongside risk transfer technology, to close the still-widening insurance protection gap for over two decades now.

What’s needed are concerted efforts to put the onus on protection of lives, communities, livelihoods and economic activity for economic actors, with a focus on ensuring governments and corporations around the world take some greater level of responsibility for the financial exposure their respective constituents face due to crises.

The insurance, reinsurance and ILS industries are always available to help in delivering risk transfer solutions, but there needs to be buyers of protection and markets for risk.

These just don’t exist meaningfully currently, in the areas of the global economy where financial impacts of crises go uncovered. As there is no onus on those generating, deriving, or extracting economic value to account for these risks and put in place more meaningful protection of their constituents and dependents.

Transformational expansion of risk transfer to capital markets needed to finance future crises was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.

This content is copyright to www.artemis.bm and should not appear anywhere else, or an infringement has occurred.

Competitive pricing for industry-loss warranty (ILW) protection has driven “considerable interest from a growing demographic of buyers” at the January 1st 2025 reinsurance renewals, according to broker Howden Re.

Industry-loss warranty (ILW) market activity has continued to be strong, as had been seen through the hard cycle, the reinsurance broker explained in its new renewals report.

Buyers have been seeking out well-priced retrocessional protection, in addition to which we have also seen some strategic industry-loss trigger structured protection purchases from a number of primary carriers, seeing the ILW product as well-priced in derivative and securitized catastrophe bond forms.

ILW trade size, count and limit transacted have all been increasing, Howden Re explained, as increasing numbers of buyers (reinsurers and insurers) opt to integrate this industry-loss index triggered product into their wider purchasing strategies.

Howden Re estimates that the market for industry-loss warranties (ILW’s) grew by around 10% to US $7.7 billion in terms of limits transacted from 2023 into 2024.

“The highly responsive nature of the market has seen it successfully navigate a period of market-moving losses (including Hurricane Ian), historically high pricing, fluid supply and demand dynamics and, most recently, a forecasted hyperactive 2024 hurricane season that ultimately resulted in limited ILW losses,” Howden Re explained.

Despite some uncertainty over the direction of travel in loss estimates related to 2024’s major hurricanes Helene and Milton, buyer behaviour was relatively unchanged, given most ILW’s trigger at higher levels of industry loss, Howden Re continued.

Some of the broker’s clients are reviewing their purchasing strategies, being motivated by earnings protection.

All of this explains significant movements in the industry-loss warranty (ILW) market since 2022, as following a period of constrained capacity, low losses and a more positive capital supply environment sets the scene for reduced pricing, Howden Re believes.

The broker noted that US peak peril ILW’s incepting at January 1st 2025 have been trading at lower rates-on-line as a result, reflecting the price environment across reinsurance, retrocession and, of course, the catastrophe bond market.

“Such flexibility, combined with more competitive pricing relative to competing products – US peak peril ILWs incepting at 1 January 2025 showed 20-30% nominal rate reductions from the mid-year 2024 trading period and 5-10% nominal rate reductions from January 2024 – has sparked considerable interest from a growing demographic of buyers,” Howden Re stated.

These ILW price movements closely resemble what we have been hearing from our market contacts.

We’ve updated our industry-loss warranty (ILW) pricing data set using insights gathered over the last few weeks from a range of our market sources.

In the ILW pricing chart below (analyse an interactive version of here), the dotted-lines indicate projections for the forward-looking ILW rate environment.

Howden Re went on to explain that the ILW market is offering competitive pricing for a full-range of products, including aggregate covers, subsequent events, state- and county-weighted ILW’s, and multi-year contracts, all across a broad range of perils and geographies.

The reinsurance broker said, “2024 already stood out for increased trades in international ILW markets, predominantly for the perils of EU wind and flood (at a trigger level of ~US$10 billion). The market is also open to exploring the even more challenging issue of earnings protection from US severe convective storms, with client demand and executed transactions steadily increasing. Parametric solutions are also being explored, with limits likely to scale up rapidly with successful proofs of concept.”

Emphasising “flexibility” in the ILW market, Howden Re said that, “In addition to traditional retrocession purchasers (who are increasingly attracted by healthy supply, a broadening product suite and competitive pricing), interest from insurers is also growing as they become more confident in the management of basis risk.”

As a result, ILW market “Momentum persisted into 1 January 2025 renewals as strong demand and abundant supply drove high trading levels, portending well for further growth this year,” Howden Re concluded.

We hope you find our ILW pricing data useful, as another indicator of reinsurance and retrocession market appetite and rates-on-line.

Competitive ILW pricing drives considerable buyer interest at renewal: Howden Re was published by: www.Artemis.bm
Our catastrophe bond deal directory
Sign up for our free weekly email newsletter here.