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Universal Insurance Holdings, the Florida headquartered insurer, has already completed its June reinsurance renewal and its CEO said that the company added more multi-year protection this time, while also adding more reinsurers to its panel.

As a Florida focused carrier, Universal is considered one of the bellwether’s for signals of appetite for risk and use of reinsurance for those operating in the state.

Back in March, the company had already revealed that it had secured 90% of its first-event reinsurance tower for 2024 with more multi-year coverage, as the company got out early to avoid the market congestion around the mid-year renewals.

Now, Stephen J. Donaghy, Chief Executive Officer of Universal, has explained that the mid-year reinsurance renewal is completed some weeks ahead of the coverage inception date.

“I’m pleased to announce the completion of our 2024-2025 reinsurance renewal for our insurance entities, as our program is now fully supported and secured,” CEO Donaghy explained in announcing the insurers first-quarter results (read more on the results over at our sister publication Reinsurance News).

Donaghy went on to explain that, “We’ve also secured additional multi-year coverage, taking us through the 2025-2026 hurricane season and have added new, financially strong reinsurers to our existing panel of long-term partners.”

“This achievement reflects the diligence and planning of our reinsurance team throughout the year,” he added. Also saying that, “Program cost and coverage were consistent with our expectations and we’ll provide specific details at the end of May, as we typically do.”

Universal has been growing back into Florida and reported 5.2% growth in Florida for the first-quarter, but also 25.6% in other states, showing that its still on a path to diversify its business further.

Still, almost 80% of Universal’s premiums written in Q1 2024 came from Florida, reflecting the fact its reinsurance tower is largely a Florida wind risk opportunity.

Universal finalises renewal with more multi-year reinsurance, expanded panel: CEO was published by: www.Artemis.bm
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Banque Bonhôte & Cie, a Swiss private bank, investment firm and wealth manager, has announced the launch of a new environmental, social and governance (ESG) focused fund strategy that will incorporate catastrophe bonds as one of its allocations.

Pierre-François Donzé, Head of Asset Management at Banque Bonhôte, said that, “Our approach and the integration of ESG criteria, is based on a quantitative allocation methodology to identify appropriate investment opportunities in the entire spectrum of the fixed income bond universe.”

The newly launched Bonhôte Selection Global Bonds ESG fund strategy does not follow a benchmark, instead leveraging quantitative methods to identify assets to invest in from the fixed income universe, based on indicators that define the attractiveness of one type of bond, over another.

These can range from the majority of the global fixed income universe, including sovereign bonds, investment-grade and high-yield corporate bonds.

But in addition catastrophe bonds are a specific asset class that will be targeted for this ESG focused investment fund strategy, the private bank explained.

The private bank notes that, catastrophe bonds, “Offer an advantageous risk/reward and provide useful diversification through a performance that is largely uncorrelated with conventional financial markets.”

Explaining that, “CAT bonds, which are part of the insurance-linked securities (ILS) category, are used by insurers and reinsurers to transfer the risks of predefined events to investors.”

The strategy has been optimised for investors whose reference currency is the Swiss franc and takes into account the cost of currency hedging as well.

The use of ESG criteria to identify opportunities is “a fundamental part of our investment strategy,” Banque Bonhôte & Cie said.

“The fund promotes environmental or social features, or a mix of the two, by investing in the vehicles and securities of issuers with an ESG profile above the median of their peers. Many controversial business activities and sectors are automatically excluded,” the company further explained.

Catastrophe bonds can be up to a maximum of 20% of the ESG investment fund strategy

Julien Stähli, Director of Investments, stated “This new fund gives pride of place to ESG criteria and marks a further step in our long-standing commitment to responsible investment and quantitative approaches.”

Donzé also said the approach taken, “Makes it possible to add value compared to strategies limited to a single market segment. The indicators used estimate the relative attractiveness of the various segments of the bond market on a historical basis.”

He also said that the Global Bonds ESG fund portfolio will be “dynamically rebalanced” when the indicators used suggest this is necessary.

It’s clear that Banque Bonhôte & Cie recognises the investment qualities of catastrophe bonds and the diversifying benefits they can deliver to portfolios, as well as the inherent ESG qualities given their role in the provision of critical disaster risk financing to support the global insurance and reinsurance industry.

As we previously reported, Banque Bonhôte & Cie had said before that catastrophe bonds, as an asset class, exhibits the rare property of price moves that are independent of broader financial markets and so can be considered “the only true source of diversification.”

Banque Bonhôte launches ESG fund strategy incorporating catastrophe bonds was published by: www.Artemis.bm
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The City National Rochdale Select Strategies Fund, a US mutual insurance-linked securities (ILS) fund focused on investments into industry-loss warranties (ILW’s) and industry-index trigger catastrophe bonds, delivered its strongest annual performance in the last year, with an almost 15.6% return to its investors.

With a now six year track record for this fund, Kurt Hawkesworth, President and Chief Executive Officer of the City National Rochdale Select Strategies Fund, commented, “The Fund’s 2023 portfolio performed well, with a net return of +15.58% for the year ended January 31, 2024.

“The Fund’s 2023 calendar year net return was the highest since the Fund’s inception and 2023 is the sixth consecutive year that the Fund generated positive, fundamentally non-correlated returns.”

Recall that, investment adviser City National Rochdale (CNR) offers this industry-loss warranty (ILW) and industry-index trigger focused mutual insurance-linked securities (ILS) fund strategy in the United States.

The capital from the City National Rochdale Select Strategies Fund is allocated to opportunities that are portfolio managed by the ILS investment team at Neuberger Berman and housed in its segregated account vehicle.

As Artemis’ index of ILW pricing shows, the industry-loss warranty (ILW) opportunity remains attractive, despite some notable softening of index-linked ILS products, such as ILW’s and catastrophe bonds.

That has helped the CNR ILW fund to a record return, over the last year to January 31st 2024.

Hawkesworth continued to explain, “The Fund’s 2023 return reflects the higher premiums realized following the occurrence of Hurricane Ian and increasing cash yields. In the catastrophe bond (“Cat Bond”) space, positive momentum for the Fund’s performance was assisted by a record total issuance in the primary market, and a secondary market that created tactical trading opportunities as sellers gradually sold off bonds maturing at the end of the year at a discount to raise cash for new issuances.”

Hawkesworth also noted that the CNR ILW fund portfolio was constructed to be more defensive, with higher attachment points, wider exclusions of non-peak secondary perils, and increased regional diversification through county- and state-weighted positions.

He noted that, weighted ILW protection continues “to become a larger share of the portfolio as demand from insurers and reinsurers for these products has steadily increased.”

He also commented that, “We believe that the incorporation of real-time environmental and financial risk considerations can have a meaningful positive influence on longer-term results and that our active management was an important driver of performance in 2023.”

Looking ahead, Hawkesworth explained that, “Currently, pricing in both the industry loss warranty (“ILW”) and Cat Bond segments continue to be attractive, albeit down slightly from the historic highs seen in Q4 2022. We remain confident that this environment will continue to present a compelling investment opportunity given the demand we are seeing as well as the structural and pricing improvements achieved post-Hurricane Ian.

“The Fund’s portfolio construction process for 2024 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.”

At January 31st, the total net assets of the City National Rochdale Select Strategies Fund had risen to almost $223.9 million, up from $218 million as of October 31st 2023.

Investments into ILW’s and industry-loss trigger cat bonds totalled $211.9 million of that, slightly down from the $213 million at October 31st last year.

The 15.6% return is healthy and outpaces many pure catastrophe bonds for that period, as ILW’s can often have higher return potential.

View our chart of industry-loss warranty (ILW) price trends here.

City National Rochdale mutual ILW fund delivers 15.6% return was published by: www.Artemis.bm
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Tokio Marine Holdings, Inc., through its subsidiary Tokio Marine & Nichido Fire Insurance Co. Ltd., has become the first Japanese insurer to make use of a SOFR-based World Bank Sustainable Development Bond as a permitted investment within its latest catastrophe bond issuance, the company highlighted today.

As Artemis has been reporting, Tokio Marine has been in the market since February and has now secured its targeted $100 million Kizuna Re III Pte. Ltd. (Series 2024-1) catastrophe bond recently, with the reinsurance coverage from the transaction priced at the low-end of initial guidance.

Now, the Japanese insurer has highlighted its use of the proceeds of the catastrophe bond issuance to purchase a sustainable development bond, saying that using this “as collateral for the Kizuna Re III cat bond is supporting the achievement of sustainable development goals and contributing to the realization of a sustainable society.”

Use of proceeds of cat bond issues to invest into financing for sustainable development helps sponsors align their catastrophe bond issues with their own environmental, social and governance (ESG) agendas, while also making the investment more appealing to investors with an ESG focus or mandate.

Tokio Marine used the proceeds of the Kizuna Re III 2024-1 catastrophe bond, that provides it with earthquake reinsurance and was issued out of Singapore, to purchase a SOFR-based Sustainable Development Bond issued by the World Bank Group’s International Bank for Reconstruction and Development (IBRD).

The company said that, through its sustainability strategy, it aims to “solve social issues through business activities and contribute to the realizations of a sustainable society” as a medium- to long-term growth engine and is accelerating its efforts to take climate action, improve disaster resilience, and protect the natural environment.”

The company said that, as part of its goal to improve disaster resilience in what is one of the most disaster-prone countries in the world, Tokio Marine has been a regular user of catastrophe bonds, alongside purchasing traditional reinsurance capacity.

“As a part of these strategies, besides sponsoring the issuance of the Kizuna Re III cat bond, TMNF has elected to invest the proceeds from the sale of the Kizuna Re III cat bond in a SDB issued by IBRD (rather than money-market funds), which is the first example of a Japanese insurer doing so since IBRD notes transitioned from LIBOR to SOFR,” the company explained.

Adding that, “The principal amount of this catastrophe bond raised from qualified institutional investors will be invested in a SDB issued by IBRD under its Global Debt Issuance Facility. The net proceeds of the SDB will be used by IBRD to fund projects, programs, and activities in IBRD’s member countries designed to achieve positive social and environmental impacts and outcomes.”

It’s encouraging to see the use of sustainable development bonds as collateral investments in the catastrophe bond market expanding further beyond just the World Bank, to private insurance sector cat bond sponsors.

The World Bank itself was the first to do so this, since when insurance giant Assicurazioni Generali S.p.A. developed its framework for Green insurance-linked securities (ILS) which saw the proceeds of one of its catastrophe bonds used to refinance a green asset in an effort to help avoid greenhouse gas emissions.

But, Tokio Marine is the first private insurance or reinsurance market sponsor of a catastrophe bond to use a puttable SOFR linked Sustainable Development Bond from the IBRD, which marks an efficient way to structure a cat bond with collateral that can be put to work in supporting sustainable or ESG driven goals.

As a reminder, Gallagher Securities, the insurance-linked securities (ILS) specialist arm of reinsurance broker Gallagher Re was the sole structuring agent for this new cat bond for Tokio Marine, so will have been instrumental in incorporating the sustainable development bond as permitted investments for the collateral, within the overall cat bond structure for this issuance.

You can read all about this new Kizuna Re III Pte. Ltd. (Series 2024-1) catastrophe bond transaction and every other Tokio Marine sponsored cat bond in our Artemis Deal Directory.

Tokio Marine is first Japanese cat bond sponsor to use sustainable development bond was published by: www.Artemis.bm
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According to Artemis’ sources, activity in the industry-loss warranty (ILW) market has increased in the last few weeks, as reinsurance and insurance-linked securities (ILS) markets prepare for what is anticipated to be an active 2024 Atlantic hurricane season.

As we’ve reported, long-range seasonal forecasts for Atlantic hurricanes have suggested a challenging storm season could be ahead.

As we said, one forecaster called for a “hurricane season from hell” in 2024, while another is seen as particularly aggressive in calling for a large number of storms.

As we also reported from the SIFMA ILS event last week, forecaster Phil Klotzbach, Ph.D., from the Department of Atmospheric Science of the Colorado State University, said that the odds of La Niña are “pretty elevated” while conditions suggest we might not necessarily see as much re-curvature of storms as we did last year.

Forecasts are now concentrating minds on what could be ahead this hurricane season, with the Atlantic also at record warmth in the main development region, where storms form and fuel themselves.

With all that going on, it makes sense those holding portfolios of US coastal hurricane exposure would be preparing themselves and their portfolios for what could be a busy year of watching the tropics.

At the SIFMA ILS event in Miami last week, the subject of industry-loss warranties (ILW) and hedging preparations for hurricane season came up with a number of our contacts at ILS managers and investors in the sector.

All said that activity in ILW’s had picked up in just the last few weeks, while we also met some active buyers for the instruments.

It seems with a busy hurricane season forecast, the main route to hedging the portfolios of ILS investments continues to be the ILW, with some discussing the county-weighted industry-loss triggered instruments as well.

There was also discussion of industry-index products being constructed to more accurately reflect peak exposures in catastrophe bond portfolios, as tools for hedging against US wind exposure.

One source told us that ILW pricing has remained under-pressure through recent weeks, recall that Artemis’ data on industry loss warranty (ILW) price trends was already signalling this would occur during the last quarter of 2023.

Managers of portfolios of ILS instruments, reinsurance and retrocession with significant coastal wind exposure in the United States are keenly focused on ensuring their peaks are managed and concentration risk is controlled, we are told.

All of which makes perfect sense, in a year where such high hurricane numbers are being forecast currently.

We are also told that interest in ILW’s for hedging is being shown in some quarters of the London market as well, where retrocession needs have remained less sufficient than in previous years.

While the retro market was far more balanced at the January renewals, not everyone managed to secure the hedging capacity they needed and some were waiting to see how Atlantic conditions developed.

For those with capacity to deploy in support of industry-loss based reinsurance and retro, now might also be a good time to deploy it, as the forecasts may also assist in holding rates up a little more and some are suggesting that the softening in ILW triggered instruments that we’ve seen in catastrophe bonds of late may be slowing or even halting at this time.

We are told that capacity remains in ample supply for ILW’s and industry-loss index triggered instruments, albeit becoming more selective than it was around the January renewals.

Of course, there’s still a long way to go until the hurricane season peak and with more season hurricane forecasts due out over the next few weeks, it will be interesting to see if the activity levels in trading instruments such as ILW’s can further increase.

ILW market activity rising, as preparations for hurricane season begin was published by: www.Artemis.bm
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An innovative parametric insurance product that provides protection to fund repairs following storm damage to coral reefs in Hawaii has been renewed and its coverage expanded, while global reinsurance firm Munich Re is again backing the cover, which is arranged by WTW.

Back in November 2022, WTW alongside The Nature Conservancy launched the parametric coral reef insurance concept in the United States for the first time with a policy focused on Hawaii. Munich Re underwrote the risk for that first Hawaiian coral reef parametric insurance arrangement.

The same parametric risk transfer product concept had already been utilised in Mexico and was then expanded to also cover the Mesoamerican Reef system.

As we reported earlier this month, broker WTW has now taken the coral reef insurance concept across the globe to cover a South pacific coral reef in the Fiji archipelago as well.

Now, the Hawaii instance of the product has been renewed, with expanded coverage and higher payouts available, so that it can make more impact on the reef and the communities that rely on it.

The new parametric coral reef insurance policy expands coverage around the main Hawaiian islands and increases payouts after qualifying storms, WTW explained.

The new Hawaiian policy adds 314,976 square miles to the coverage area so that it can capture more storm events, with a maximum payout of $2 million total over the year-long policy period and $1 million possible per storm.

At the same time, the minimum payout after the parametric trigger is activated has doubled to $200,000, enabling a more meaningful post-storm response.

Payouts can be triggered when tropical storm winds of 50 knots or greater occur in the core of the coverage area.

Once again, a Munich Re insurance entity was selected as the coverage provider from seven competitive bids.

WTW said that more companies bid on this year’s policy, which it noted shows “increasing interest among insurers in nature-based solutions to protect against climate impacts.”

“Parametric insurance is increasingly demonstrating value in addressing disaster risk for natural assets, in this case providing Hawai’i with a tangible solution to quickly finance post- storm restoration activities that help reefs better recover and maintain resilience in the face of increasing climate impacts,” explained Simon Young, Senior Director in WTW’s Disaster Risk Finance and Parametrics team. “Increasing recognition of this value by conservation organisations, government bodies and other stakeholders on the demand side and by insurers on the supply side is mainstreaming parametric protections, driving accessibility and sustainability.”

“We are building something really transformative for communities and ecosystems as we respond to increasing storm activity associated with the climate crisis,” added Ulalia Woodside Lee, Executive Director, The Nature Conservancy, Hawai‘i and Palmyra. “The first policy provided momentum to develop response plans and partnerships. With these now in place and an increased minimum payout, we will be able to start damage assessments and reef repairs after a storm as soon as it’s safe to get in the water. This is important because corals must be reattached within several weeks after breaking or they will likely die.”

René Mück, Munich Re’s Global Head of Natural Catastrophe Parametrics, also said ”Using parametric risk transfer as a means to contribute to TNC’s conservation objectives in Hawaii aligns exactly with the objectives of Munich Re’s parametric business unit. We are proud to support TNC in Hawaii and appreciate the work with WTW on such initiatives.”

The parametric coral reef insurance product has already demonstrated its utility, when Hurricane Lisa’s landfall in Belize on November 2nd 2022 triggered the Mesoamerican Reef system parametric insurance product.

Munich Re behind Hawaii coral reef parametric insurance renewal, coverage expands was published by: www.Artemis.bm
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An innovative parametric insurance program has been taken across the globe to cover a South pacific coral reef in the Fiji archipelago, with broker WTW saying it will provide up to US $450,000 of cover for reef restoration and community assistance if cyclones hit.

The payout would go to Fiji’s island communities, if a cyclone hits the coral reef system of the South Pacific Ocean’s volcano-formed Lau Group of islands.

The Indigenous people of Lau depend on the reef ecosystem as a source of food and income, so protecting it using a parametric risk transfer insurance product that will pay out after a cyclone strikes which could damage the reef, can enable the community to recover faster and put funds into reef conservation, restoration and resilience.

Development insurer and risk pool the Pacific Catastrophe Risk Insurance Company (PCRIC) is the insurer for this South Pacific parametric reef insurance, winning the bid after what WTW called “a competitive placement process.”

WTW worked with local correspondent broker Insurance Holdings (Pacific) Pte Ltd. and Fiji’s Vatuvara Foundation (VVF), which is the policyholder of the parametric insurance programme.

As well as helping to protect and repair the reef in the event of a cyclone, the parametric insurance payouts can be used to support the community with assistance activities to help address food and water security concerns caused by storm damage.

The initial coverage is for Vatuvara Island, a protected natural reserve; Yacata, where the local community resides; and Kaibu, the Vatuvara Private Islands Resort, while further sites in the Lau Seascape may be covered in future years.

Broker WTW has successfully renewed a similar parametric coral reef insurance product for the Mesoamerican coral reef a number of times now, expanding it with each renewal.

Sarah Conway, Director and Ecosystem Resilience Lead, WTW, commented “We are grateful to BHP for supporting the design and implementation of the first coral reef insurance programme in Fiji. Building on lessons learned from our involvement with similar initiatives in other countries, this programme provides an exciting opportunity to innovate beyond rapid reef response to also include community assistance, enhancing the resilience of the ecosystem and those who depend on it.”

PCRIC CEO, Aholotu Palu, stated, “PCRIC is very pleased to demonstrate its commitment to serve non-sovereign entities with innovative parametric insurance products, in line with PCRIC’s mission to help the island communities of the Pacific to better prepare, structure and manage finances to foster disaster resilience and ensure rapid access to funds; the work of the Vatuvara Foundation, both in reef conservation and in local community empowerment, is recognised by the Government of Fiji as being in the national interest and consistent with development priorities, particularly the Blue Pacific Strategy, as well as commitments to climate change adaptation and disaster risk management.”

Katy Miller, Director, Vatuvara Foundation, added, “We are thankful that the innovative parametric policy will allow for the prompt access to funds following a destructive cyclone event to identify reef damage and assist reef recovery with a community-led team in Northern Lau. Increased frequency and severity of extreme weather events is expected in the area, and protecting natural ecosystems in the Lau Group is crucial to build long-term community resilience to anthropogenic threats including climate change.”

Ashley Preston, Head of Climate Resilience, BHP, also said, “BHP is funding an innovative parametric insurance product, which aims to support the conservation of coral reefs and surrounding local communities in Fiji’s northern Lau Group, and build the knowledge base for how similar financial products could be used to improve climate resilience. We are pleased to work with WTW and Vatuvara Foundation on this project, which supports BHP’s commitments to action on climate, conservation and empowering communities.”

Parametric insurance to cover South Pacific coral reef in Fiji archipelago was published by: www.Artemis.bm
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Jireh Connect, a technology platform that targets helping brokers place risk more efficiently with reinsurance and risk capital providers and manage the process more effectively, has announced the completion of its first placement, an industry loss warranty (ILW).

Jireh Connect has been launched by well-known Bermuda-based insurance-linked securities (ILS) market executive Sal Tucci.

Last year, Tucci launched Jireh Holdings Ltd., a company offering ILS risk transformation, fronting and advisory services to clients, with a broader insurance management offering in the works.

Jireh Connect was also launched, as Tucci sought to bring a technology platform to market that is built by brokers, for brokers, but makes their workflow easier and more efficient.

The Jireh Connect platform was soft-launched with one broker in Bermuda at the start of this year, successfully managing nearly $100 million in capacity across various ILW structures in its first month of operation, the company claimed today.

“We couldn’t be more pleased with the early success of Jireh Connect both in terms of facilitating its first bound transaction but also in having six markets actively engage on the platform,” explained Tucci. “We have had very positive feedback without our having made any prior public announcement of its availability to them. We credit this positive engagement to our very different approach to technology within our unique market.”

As we reported, ReFlex Solutions Ltd, an independent reinsurance brokerage headquartered in Bermuda launched by Neville Ching was said to be partnering with Jireh.

Jireh Connect enables brokers to coordinate reinsurance placements across their teams, acting as a front-office broker workbench, which can distribute deals, share documents with markets and capture external market feedback for users.

The platform can deliver analytics on market appetite and pricing in real-time, to help inform strategies when structuring transactions.

Jireh Connect was initially launched as a Minimum Viable Product (MVP) in 2024, with a focus on becoming a reinsurance broker workbench for ILW arrangements. New product offerings and system features are expected to be rolled out based on market demand, the company said.

Tucci said, “In the past, we’ve seen the roll out of numerous platforms in the reinsurance market developed by people from outside the industry who, looking in from the outside, endeavor to compress the value chain by disintermediating what they deem to be an inefficient market. We believe this is absolutely the wrong approach. Jireh Connect has been specifically designed ‘by brokers for brokers’ to complement the current reinsurance broker market process rather compete or replace it.”

Tucci further explained, “By way of example, despite the unquestionable convenience of ordering and paying for goods via your smartphone, there will always be customers who opt to wait in longer lines to order and pay cash. Many previous technology attempts within the reinsurance market make sense in theory and look great in a venture capital pitchbook, but the well-entrenched realities of how reinsurance is bought and sold cannot simply be ignored. Given our deep market experience, we designed Jireh Connect to provide the same efficacy to brokers through the platform even when customers or markets opt to communicate via email or in person. That is a significant differentiator between Jireh Connect and others that have come before us.”

Jireh Connect facilitates first industry loss warranty (ILW) placement was published by: www.Artemis.bm
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