Artemis Live - Insurance-linked securities (ILS), catastrophe bonds (cat bonds), reinsurance

Michael Bennett, Head of Derivatives & Structured Finance at the World Bank Treasury kindly joined us for an interview as part of our virtual ILS NYC 2021 conference.  He shared his thoughts on the World Bank's work in disaster risk financing and the use of insurance-linked securities (ILS) structures, such as catastrophe bonds, alongside traditional reinsurance, to help its member countries enhance their resilience.  We discussed his views on where the World Bank's use of insurance-linked securities (ILS) may evolve towards in the future.  This included how the catastrophe bond fits into disaster and other forms of risk financing, what has gone well and what the insurance-linked securities (ILS) market could perhaps do differently to support the expansion of this work.  Michael also explained what he believes needs to happen for uptake of sovereign ILS and catastrophe bonds to increase, as well as where more issuance could come from.

Marcus Rivaldi, Managing Director, Analytics at specialist ILS and reinsurance investment manager Twelve Capital, joined us to explore environmental, social and governance (ESG) practices in the insurance-linked securities (ILS) market, as part of our ILS NYC 2021 virtual conference.  We spoke about ESG (environmental, social, governance) and what the insurance-linked securities (ILS) sector needs to consider moving forwards.  Discussing some of the important issues that need to be addressed to ensure the ILS asset class can meet the demands of investors for ESG compatible returns.  Marcus also explained that the already large environmental, social and governance (ESG) investor community is poised to expand further, but in order for the insurance-linked securities (ILS) sector to really take advantage of the opportunity it needs to address certain challenges. Rivaldi highlighted inconsistency across the insurance and reinsurance balance sheet, with carriers being more eager to disclose information on the asset side of the balance sheet, but not so willing on the liability side. Furthermore, geographical inconsistency is also a hindrance, he added. Of course, it’s also going to be critical for the market to really demonstrate the understanding and management of environmental-type risks, which raises the climate factor and the capabilities of modelling for certain exposures.

For this interview, with Cory Anger, Managing Director and Liam Martens, Vice President, both from GC Securities, the capital markets division of reinsurance broker Guy Carpenter, we discussed the next generation of catastrophe bonds. The pair joined us as part of our virtual ILS NYC 2021 conference, to discuss where catastrophe bonds could gain broader market acceptance and uptake.  As well as how insurance-linked securities (ILS) in general can play an increasingly important role in risk transfer and reinsurance markets.  We discussed how the insurance-linked securities (ILS) market can assume a larger role in insurer and reinsurer capital stacks and what that would mean for insurance and reinsurance cedents. Catastrophe bonds can become a more permanent piece of the insurance and reinsurance market's capital arrangements, the pair believe. Which would see insurance-linked securities (ILS) becoming a form of permanent capital, that can be relied upon for evolving and growing insurance or reinsurance businesses.

This group discussion was held during our ILS NYC 2021 conference, to explore the expansion of the insurance-linked securities (ILS) asset class to cover a broader range of perils. We welcomed: Yaniv Bertele, Co-Founder & CEO of Vesttoo Ltd.; Thibaut Adam, Managing Director, Citi; Kenny Durbin, Senior Vice President, Guy Carpenter; and Matt Beard, Managing Director, Guy Carpenter.  The panel joined us to explore areas of potential insurance-linked securities (ILS) market expansion as part of our ILS NYC 2021 virtual conference.  We talked about the opportunities for capital market investors in areas of risk outside of the more typical property catastrophe exposures that are commonplace in ILS markets.  We also explored the potential for technology such as artificial intelligence to enable and facilitate the transfer of longer-tailed risks to the capital markets, as well as where the ILS market is going in terms of non-CAT risk investments.  Specific segments explored included casualty lines of business, specialty risks, as well as life and health related exposures.  The investor appetite for a broader range of reinsurance perils in insurance-linked securities (ILS) format was also discussed.

Michael Millette, Founder and Managing Partner of Hudson Structured Capital Management joined us for this interview as part of our ILS NYC 2021 virtual insurance-linked securities conference. The discussion focused on Michael's views on the forward-looking development of the insurance, reinsurance and insurance-linked securities (ILS) market, as well as how capital use may change across insurance and reinsurance.  The wide-ranging discussion also covered the special purpose acquisition company (SPAC), digital technology and insurtech, as well as where surprises and opportunities may come from that may benefit insurance-linked securities investors and investors across the rest of the insurance and reinsurance spectrum.  In particular we focused on topics relevant to the fact Millette believes the insurance and reinsurance sector will change more over the next decade than it has in the last 70 years.

Michael Stahel, Partner and Portfolio Manager, LGT ILS Partners, joined us to explore insurance-linked securities allocation strategies, as part of our ILS NYC 2021 virtual conference. For this interview we discussed what a next-generation insurance-linked securities (ILS) allocation strategy could look like.  Michael explained how this has been approached at LGT ILS Partners in their collateralised reinsurance underwriting and ILS investment, as well as his view on how future strategies may evolve.  We also spoke about new strategies that could bring greater efficiency to both investor and ILS fund manager capital as well.  While still remaining true to the original premise of insurance-linked securities and collateralized reinsurance, delivering efficient capacity to support risk transfer transactions.

Barney Schauble, Head of Labs at Nephila Advisors, part of insurance-linked securities (ILS) manager Nephila Capital, joined us for a fascinating discussion as part of our ILS NYC 2021 virtual conference.  The discussion focused on the opportunity side of the environmental, social and governance (or ESG) question for the insurance-linked securities (ILS) market.  Schauble discussed the importance of climate and impact related risk transfer and how this could play into the ILS market over time.  Importantly touching on what this could mean for the insurance-linked securities (ILS) investment community going forwards, as well as for the use of ILS structures to support climate related risks, and impact focused insurance or reinsurance risk transfer.

We were delighted to be given some insight into global reinsurance giant Swiss Re's plans for future insurance-linked securities (ILS) activities by Judy Klugman, Global Co-Head of ILS, and Ed Johnson, Head of ILS Sales EMEA & APAC, both from Swiss Re Capital Markets.  The pair joined us as part of our virtual ILS NYC 2021 conference, to discuss the role of the reinsurer in delivering next generation ILS investment opportunities. Judy and Ed explained where the next generation of ILS investment opportunities with Swiss Re as a partner will likely come from.  As well as what the role of a global reinsurance player like Swiss Re is in delivering future ILS investment opportunities and structures.  We also touched on how Swiss Re’s strategy of bringing ILS capacity into its own capital structure more directly is going to continue to evolve.  While lines of insurance and reinsurance business that may be deemed suitable to partner with capital market investors were also a topic of conversation.  Judy and Ed also gave us their thoughts on the future role of the catastrophe bond as a staple of ILS and reinsurance risk management.

Niklaus Hilti, Head of insurance-linked securities (ILS) at investment manager Credit Suisse's Insurance Linked Strategies division joined us as part of our ILS NYC 2021 virtual conference.  Niklaus discussed his forward-looking, perhaps blue-sky view of what the insurance-linked securities (ILS) market could become over the next decade.  Catastrophe bonds, collateralized reinsurance and other established ILS instruments such as sidecars and ILW's were discussed.  Niklaus also explained how structures could change in the ILS market in future, what investor appetite may look like, as well as future origination processes to secure access to insurance and reinsurance risks.

Tom Johansmeyer, Head of PCS, a Verisk business, joined us during our ILS NYC 2021 virtual conference to discuss the important role of the industry-loss trigger in insurance-linked securities (ILS) and catastrophe bonds.  He shared his thoughts on how use of the industry-loss trigger structure may evolve over the next few years in catastrophe bonds, ILS and reinsurance.  He also provided some outlook on cat bond market activity and ILS for the coming year, as well as how such structures can become increasingly important to those seeking reinsurance or retrocessional protection.  Tom also shared some thoughts on basis risk in reinsurance more generally with us, discussing how cedents generally consider this.