Cat bonds, ILW's, sidecars, retro, renewals, oh my!

Episode 10,   May 29, 2020, 12:24 PM

In this episode we discuss the fascinating state of the insurance-linked securities (ILS) and reinsurance market at this time, focusing on catastrophe bonds, industry loss warranty's (ILW's), reinsurance sidecars, retrocesssion and the mid-year renewals.

With speculative capacity now being seen in the market, speculative covers being sought, and rates hardening in property catastrophe reinsurance, we find ourselves in a market the likes of which has not been seen for more than a decade.

We discuss the buoyant catastrophe bond market, which has proven particularly resilient to the Covid-19 pandemic, the ILW market which has been struggling to clear, the reinsurance sidecar market where some sponsors are struggling for capacity and retrocession which some are calling dysfunctional.

Feeding into these markets are the same set of dynamics. The losses of recent years, the ILS market impacts seen from trapped capital, the contraction of the retrocession offering, then the pandemic losses and investment side impacts, as well as now the ongoing uncertainty over what this all means for the coming months and years ahead.

All of which shapes the market for a fascinating second-half and potentially a lot of hedging activity.