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

The successful issuance of the first full cyber catastrophe bonds in late 2023 was a watershed moment and the role of risk models in helping insurance-linked securities investors get up to speed on what is still a relatively new peril to the ILS sector was key, executives at Moody's RMS told us in an Artemis Live interview. To find out more about the role of risk models in getting the first cyber cat bonds to market successfully, we spoke with Moody's RMS executives Damini Mago - Senior Product Manager, Cyber and Alice Woolley – Lead Consultant, Risk Advisory, recently. With now four full 144A cyber catastrophe bonds successfully brought to market, the role of risk models has been critical in helping cedents to access an important new source of reinsurance capital and for investors to understand the exposures they were being presented with. Moody's RMS Senior Product Manager, Cyber, Damini Mago said that, "2023 saw the first cyber catastrophe bonds come to the market. It was a watershed moment bringing this to the ILS market and as by the end of quarter four, we saw for 144A cat bond transactions, securing about $415 million in protection for those sponsors. "We feel it's the first big step to open the doors for that additional capacity that the market clearly needs, especially with the premium growth that's expected from it. "We view this as a pivotal step in establishing cyber as a viable asset class for investors, contributing to the advancement of the cyber insurance market. So, it's definitely an exciting time." Helping investors to gain an understanding of the peril category that is cyber and precisely what risks these cyber cat bonds cover, was a key part of the process towards opening the ILS market up for cyber cedents. Alice Woolley, Lead Consultant, Risk Advisory at Moody's RMS explained, "It is really encouraging to see how ILS investors stepped up. They're getting to grips with this new challenge, this completely new peril, and they're supporting not just one but multiple transactions. "So, we've seen really encouraging signs and education has been a really key focus and a key part of this long journey of getting to where we are, with the cyber transactions so far." During the interview, Mago and Woolley also discussed the Moody's RMS cyber risk model and what it covers, as well as how it was applied to the cat bond issues we've seen so far. The importance of robust cyber loss event definitions was also explored and the pair also commented on the range of cyber cat bond structures that the market has seen thus far, as well as their hopes for a vibrant cyber cat bond market going forwards. Listen to the full podcast episode for more insights into the exciting new world of cyber catastrophe bonds with Moody’s RMS’ Damini Mago and Alice Woolley.

This was the sixth session of the day at our Artemis London 2023 insurance-linked securities (ILS) market conference, held on September 5th in London, UK. Around 240 attendees enjoyed a busy day of thoughtful catastrophe bond and insurance-linked securities (ILS) focused discussion from industry experts, as well as valuable networking opportunities. This session features an expert panel discussing parametric triggers in insurance-linked securities (ILS) and the future potential for parametric triggers in developing capital market backed responses to growing climate risk exposures. The panel discussion was moderated by: Rowan Douglas, CEO Climate Risk and Resilience, Howden Group. He was joined on stage by: Stephen Lathrope, Global Head of Insurance, ICEYE; Michael Bennett, Head of Derivatives & Structured Finance, the World Bank Treasury; and Edern Le Roux, Head of ILS and Cat Modeling, Descartes Underwriting. The panellists discussed how parametric triggers have helped insurance and catastrophe bond protection expand to some underserved areas. We heard of the need for greater collaboration between private and public entities, as well as the growing demand for disaster insurance protection for governments and their entities. The panellists also discussed the important role of technology in the creation of parametric triggers and how this can help drive innovation and triggers that are increasingly closely calibrated to the underlying risks that insurance and reinsurance products are protecting against. Listen to the full podcast episode to learn more about the future of parametric triggers in the insurance-linked securities (ILS) market.

This was the fifth session of the day at our Artemis London 2023 insurance-linked securities (ILS) market conference, held on September 5th in London, UK. Around 240 attendees enjoyed a busy day of thoughtful catastrophe bond and insurance-linked securities (ILS) focused discussion from industry experts, as well as valuable networking opportunities. This session features a keynote speech and Q&A with Jorge Familiar, Vice President and Treasurer, of the World Bank Group. Familiar discussed the World Bank's role in disaster risk financing and use of insurance-linked securities (ILS) such as catastrophe bonds. He explained that the World Bank's clients have benefited from significant risk transfer thanks to the cat bond structure over the years, saying that interest in insurance protection and leveraging capital market investor appetite to fund that, remains strong. Familiar also discussed the role of ILS and cat bonds at the World Bank. "We are focusing on increasing our financial capabilities and taking full-advantage of what we do in financial markets to further our mission," he explained. Adding, "This leads to insurance-linked securities (ILS)." Familiar further said that the World Bank is aware that countries need help to build resilience on the one hand, but also to build robust safety nets with different layers that will allow them to deal with natural disasters with different intensities and different probabilities of occurrence. "Hence, there is clearly a space for cat bonds here," Jorge Familiar told the audience. Listen to the full podcast episode to learn more about the World Bank Group's activities in the catastrophe bond and insurance-linked securities (ILS) market.

This was the fourth session of the day at our Artemis London 2023 insurance-linked securities (ILS) market conference, held on September 5th in London, UK. Around 240 attendees enjoyed a busy day of thoughtful catastrophe bond and insurance-linked securities (ILS) focused discussion from industry experts, as well as valuable networking opportunities. This session features an expert panel discussing the need to sustain returns, across both catastrophe bonds and private ILS such as collateralized reinsurance, and ideas as to how that can be achieved. The panel discussion was moderated by: Philipp Kusche, Global Head of ILS, Howden Tiger Capital Markets & Advisory. He was joined on stage by: Florian Steiger, Head of Cat Bonds, Twelve Capital; Hervé Castella, Chief Third Party Capital Officer, SCOR; Marco della Giacoma, Portfolio Manager, Tenax Capital; and Michael Rich, Head ILS, Commodities & Environmental Strategies, K2 Advisors. The panellists spoke about the evident diversification benefits that allocations to ILS have exhibited for investors over the last few years, saying that the lack of correlation remains a key driver for investor capital inflows to the sector. They also explored how investor sentiment is evolving in the catastrophe bond space, as well as more broadly for investments into private ILS such as collateralized reinsurance arrangements. Listen to the full podcast episode to learn more about the return potential of investment allocations to the insurance-linked securities (ILS) market.

This was the third session of the day at our Artemis London 2023 insurance-linked securities (ILS) market conference, held on September 5th in London, UK. Around 240 attendees enjoyed a busy day of thoughtful catastrophe bond and insurance-linked securities (ILS) focused discussion from industry experts, as well as valuable networking opportunities. This session features a timely panel discussion focused on cyber catastrophe bond market developments, featuring some of those involved in some of the first wave of cyber cat bonds that launched soon after this event. The panel discussion was moderated by: Kyle Freeman, Head of ILS Structuring, Property, AXIS ILS. He was joined on stage by: Joe Gottlieb, Partner, Insurance Practice, Sidley Austin LLP; Rebecca Bole, Head of Industry Engagement, CyberCube; Richard Pennay, CEO of Insurance-Linked Securities, Aon Securities; and Benjamin Baltesar, Head of Underwriting and Pricing, Credit Suisse Insurance Linked Strategies. The group explored the readiness of the market for cyber catastrophe bond, discussing the response of investors to the prospect of cyber cat bonds getting issued, and speaking to some of the challenges faced in getting investors comfortable with cyber risks in ILS form. Event definitions were a focus, as this has been one of the key considerations for sponsors and their service providers, to ensure coverage is robust from a cyber cat bond. The investor side was also discussed and the group agreed that, in cyber risk, event definitions are critical so that ILS investors understand what losses could qualify and they could be exposed to, if they invested in a cyber cat bond. The group also said that the ILS market is ready for cyber and that investors have approached this in a pragmatic manner, with the initial cyber cat bonds ready to provide a good test for investor appetite and lay the groundwork for what could be an important new peril for the catastrophe bond market. Listen to the full podcast episode to learn more about the nascent market for cyber catastrophe bonds.

This was the second session of the day at our Artemis London 2023 insurance-linked securities (ILS) market conference, held on September 5th in London, UK. Around 240 attendees enjoyed a busy day of thoughtful catastrophe bond and insurance-linked securities (ILS) focused discussion from industry experts, as well as valuable networking opportunities. This session features an insightful panel discussion focused on developments in third-party investor sentiment for allocating to the insurance-linked securities (ILS) and catastrophe bonds asset class. The panel discussion was moderated by: Lorenzo Volpi, Managing Partner / Deputy CEO, Leadenhall Capital Partners LLP. He was joined on stage by: Chantal Berendsen, Hedge Fund IDD Senior Analyst, Insurance Specialist, Albourne Partners; Martin Dietz, Head of Diversified Strategies, LGIM; and Raffaele Dell'Amore, Head ILS Centre of Competence, Partner, SIGLO Capital Advisors AG. The group explored the evolution of ILS investor sentiment over the last year and where it might be headed. They identified ongoing challenges and the need for investor concerns to be addressed, but also a steadily improving environment for ILS investor sentiment, helped by the improvements in returns available from the market, as well as the evidence of ILS portfolio enhancements that are starting to show through. Listen to this full podcast episode to learn more about the state of investor sentiment for allocating to the insurance-linked securities (ILS) market.

This was the first session of the day at our Artemis London 2023 insurance-linked securities (ILS) market conference, held on September 5th in London, UK.  More than 240 attendees enjoyed a busy day of thoughtful catastrophe bond and insurance-linked securities (ILS) focused discussion from industry experts, as well as valuable networking opportunities.  This session features a keynote speech and Q&A with Burkhard Keese, the CFO of the Lloyd's insurance and reinsurance market.  Keese discussed Lloyd's progress with its activities of relevance to the ILS investor community.  In particular, he shared an update on the London Bridge 2 PCC ILS structure and said that he expects more activity through the platform over the coming months, as Lloyd's market participants look to access efficient sources of capital and reinsurance.  Listen to the full episode for more insights about the Lloyd's market and its interaction with the insurance-linked securities (ILS) community from Burkhard Keese.

This panel discussion took place at the Artemis ILS Asia 2023 conference in Singapore on July 13th. This was the final session of the day and saw three experienced insurance-linked securities (ILS) investment managers take to the stage, moderated by Steve Evans, Artemis' Owner and Editor. The panellists taking part were: John DeCaro, Founding Principal, Elementum Advisors, LLC; Peter DiFiore, Managing Director, Neuberger Berman; and Stephan Ruoff, Head of ILS, Schroders Capital. The panel session discussed the current state of the catastrophe bond and ILS market from the vantage point of experienced asset managers focused on this marketplace. The group explored what the current attractions are for investors to look at the ILS asset class, particularly those in the Asia Pacific region. In addition, a discussion was had as to how further institutionalisation of the ILS asset class could help it to deliver on its growth potential. Pricing in catastrophe bonds was also discussed, with panellists opining on the softening of prices that has been seen through recent weeks. Overall, investor appetite for ILS is viewed as increasing, but with the market still needing to prove out the improvements to the product and underwriting or structural changes that have been made, as well as to deliver the reinsurance-linked returns investors are expecting. Listen to this full episode to learn more about the state of the cat bond and ILS market from the viewpoint of experienced ILS asset management experts.

Scott McHardy, Head of Risk Finance at Toka Tū Ake EQC, joins Esther Kim from Swiss Re and Michael Bennett of the World Bank Treasury to discuss the growing importance of catastrophe bonds in public sector risk transfer. They highlight innovative initiatives like C-Drift and Pac-Drift, and the need for effective solutions to close the protection gap for vulnerable nations. The panel also explores the complexities of insurance in light of natural disasters and the potential for significant growth in the Asia-Pacific ILS market.

This keynote speech took place at the Artemis ILS Asia 2023 conference in Singapore on July 13th. This session featured Yusuke Kikuchi, Managing Director at Aon Securities (Japan), the catastrophe bond, insurance-linked securities (ILS) and capital markets division of the global insurance and reinsurance broker. Kikuchi discussed the rapid economic growth potential of the Asia Pacific region, going on to highlight the magnitude of catastrophe losses that occur there and the resultant and still growing insurance protection gap. He went on to run through a timeline of catastrophe bond issuance in the region, highlighting key transactions and sponsors, as well as the handful of reinsurance sidecar deals that have been completed in APAC. Importantly, he noted the convergence of pricing between traditional reinsurance and ILS rates, which is helping to make the cat bond and ILS product range more appealing to sponsors. Going on to explain that there is still outsized demand from ILS investors for access to APAC risks, which means any Asia Pacific focused cat bonds and ILS would likely be well-received, while also saying that demand for ILS investments from allocators in Asia Pacific also remains high and further flows to the asset class from the region should be expected. Listen to the full podcast episode to learn more about catastrophe bond and ILS market activity in Asia Pacific and the opportunity to grow the cat bond market in the region.