Alternative Risk Transfer

"There's widespread agreement that it's virtually certain we are going to be facing another epidemic, or pandemic... The question is how soon-it could be many years. It could be next year."

Life insurers Prudential and Rothesay are set to decide within days whether to appeal against last month's shock court decision to block a £12bn annuity deal. The deal, which required a court-approved process called Part VII transfer, was part of Prudential's plan to split its UK business from its Asian and US operations.

The Indiana Public Retirement System and the Maryland State Retirement and Pension System have selected Hudson Structured to manage some of their ILS and reinsurance linked investments for them.

Mark Carney: "New products, such as insurance-linked securities based on parametric triggers, are vital to help reduce macro protection gaps and increase resilience... These are generally cheaper to structure and administer and more efficient to blend with commercial finance if required."

The industry has seen improved pricing in the property catastrophe reinsurance market during 2019, a correction that shows the reinsurance cycle is still relevant, according to Shiv Kumar.

The Horseshoe Group managed private catastrophe bond and insurance-linked securities (ILS) issuance vehicle Eclipse Re Ltd. has completed its sixth transaction of 2019, taking the total risk capital issued using the transformer to just shy of $280 million for the year so far.

In a GBP 3.8 billion buy-in deal, Rothesay Life will guarantee the benefits for 17,000 pensioners and around 10,000 workers in the Allied Domecq Pension Fund, taking Rothesay's total assets past GBP 50 billion. This is the largest deal covering yet-to-retire members.

Parametric triggers, coupled with increasingly granular data and technology, can "expand the limits of insurability" according to Swiss Re, especially when it comes to non-physical damage business interruption (NDBI).

Over the last 12 years, buy-in and buy-out volumes have increased dramatically, especially in 2018 and 2019 - with over £40bn worth of transactions expected to be completed this year. Demand now outweighs supply, resulting in some insurers having to turn away pension schemes looking to transact.

Cerulean Re SAC Ltd., the private catastrophe bond and insurance-linked securities (ILS) issuance vehicle operated by reinsurance broker Guy Carpenter and Marsh Captive Solutions, has completed another transaction, a $25 million Cerulean Re SAC Ltd. (Series 2019-E1) issuance.

The World Bank continues to explore ways it can expand the range of risks and perils that its member countries can hedge using risk transfer structures including catastrophe bonds.

Henrik Munck, a senior consultant at Insurance & Pension Denmark, an umbrella organization, says the way liabilities are currently calculated "could cause a negative spiral" that forces funds to keep buying low-risk assets, drive yields lower and the value of liabilities even higher.

"We recently supported a multi-billion £ pension scheme in securing their first buy-in transaction, which not only achieved attractive pricing but also incorporated a member options exercise. This case study highlights the importance of setting a clear long term objective and how completing a buy-in can support you in reaching that ultimate goal."

One-third of the companies in the UK's FTSE 100 index of leading shares have already transferred longevity risk associated with their pension schemes, according to Aon.

Seven Republican senators wrote a letter to Majority Leader Mitch McConnell, R-Ky., urging the passage of the Setting Every Community up for Retirement Enhancement (SECURE) Act of 2019is an important step to help families save for retirement.

"Welcome to the fourth Artemis Monte Carlo Reinsurance Rendezvous Roundtable, in which participants from across the insurance, reinsurance, and insurance-linked securities (ILS) market discussed a range of industry topics and trends."

"USAA is returning to the capital markets for what will be its 34th time sponsoring a catastrophe bond, bringing a new multi-peril Residential Reinsurance 2019 Limited (Series 2019-2) deal to market in search of at least $150 million of collateralised reinsurance protection."

"The World Bank has provided Jamaica with a $14.85 million grant out of its recently established Global Risk Financing Facility (GRiF), to help the Caribbean country expand its disaster risk financing and transfer needs."

Citadel invests and allocates capital across a huge range of asset classes, one of which within its commodities business is the energy sector and within that it appears so to is the weather exposure that energy companies tend to carry. weatherXchange helps any company access index-based, or parametric, weather protection and hedging products more easily, being able to request quotes from a number of leading capacity providers including reinsurance and insurance-linked securities (ILS) firms. Citadel Energy Investments Ltd. will join weatherXchange as one of these Protection Sellers, able to provide quotes in response to price requests received through the platform and provide weather risk protection capacity directly, or indirectly through an intermediate broker.

A catastrophe bond (IBRD CAR 121-122) has been launched to the market seeking to secure risk transfer and disaster insurance protection for the Philippines, with the World Bank supporting the country in securing a capital markets backed source of capacity for catastrophe loss events.