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Generali has developed its first Green Insurance Linked Securities Framework, in line with the Group’s sustainability strategy.

Insurance Linked Securities are alternative financial instruments allowing for the transfer of insurance risk to institutional investors.

This Framework aims to be the first contribution to develop guidelines for Green ILS structures going forward.

The future Green Insurance Linked Securities will be characterised by the investment of the collateral in assets with a positive environmental impact, and by the allocation of the transferred solvency capital to sustainable initiatives.

Generali develops framework for Green insurance-linked securities (ILS)

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Generali, one of the largest global insurance and asset management companies, has recognised the potential for insurance and reinsurance linked investments to have green or ESG credentials and has developed a framework for Green insurance-linked securities (ILS).

As a recognised European sponsor of catastrophe bonds, as one of the way’s it sources reinsurance protection from the capital markets, Generali is already a participant in the ILS market.

But the company is also a huge investor and has a focus on creating new framework’s for sustainable investing, resulting in this move to develop what it calls a “Green Insurance Linked Securities Framework”.

Generali said that this is aligned with its own sustainability and capital management strategies, with the initiative to develop a framework for Green ILS closely related to one it has already worked on for Green bond investing.

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The international community has pledged $1.25 billion to help Albania recover from a devastating earthquake during a European Union-led donors’ conference in Brussels. 

“UN agencies have joined forces in developing and implementing the recovery measures based on the sectoral needs as identified by the Government,” said Mirjana Spoljaric Egger, Director of the UN Development Programme (UNDP) Regional Bureau for Europe and the CIS.

The pledges are expected to cover the country’s reconstruction needs following the November 2019 earthquake, which was the strongest to hit Albania in more than 30 years and killed 51 people.

The aftermath of the earthquake also increased the poverty rate by 2.3 per cent and hit more than one per cent of gross domestic product (GDP), with 220,000 people or 10 percent of the country’s population being affected.

A post-disaster needs assessment undertaken by the European Union, the United Nations, the World Bank and Albania appealed for € 1.08 billion from international donors to rebuild vital infrastructure such as houses, schools, and businesses.

That amount will also fund an upgrade in the country’s disaster preparedness.

Ms. Spoljaric called for transparency in the recovery effort and urged the Albanian Government to streamline its disaster preparedness, as the country being the most vulnerable to disasters in Europe.

She further added that a strong recovery programme would provide sound foundations for the achievement of the Sustainable Development Goals (SDGs) in Albania.

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Despite the fact a catastrophe bond for Jamaica has not yet come to market, after receiving support to pay premiums for the in-development first issuance the Caribbean island nation is already preparing to budget for its future renewal.

Jamaica’s government has been working towards sponsoring its first catastrophe bond for at least two years, with assistance from the World Bank.

Our latest two updates on Jamaica’s progress towards becoming a cat bond sponsor discussed the support provided by the World Bank in risk modelling for the perils to be covered, and funding the country has received to help in paying cat bond premiums to investors.

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The government of Mexico has returned to the catastrophe bond market with the help of the World Bank and its International Bank for Reconstruction and Development (IBRD), seeking a $425 million or larger slice of parametric earthquake and hurricane disaster insurance from the capital markets through an issue we’ve named IBRD / FONDEN 2020 that is the first to incorporate sustainable development bond features.

The new transaction, which has just come to market according to sources, will be the sixth catastrophe bond that the government of Mexico’s natural disaster fund, FONDEN will be the ultimate beneficiary of.

Details on the others, the soon to mature 2018 issuance IBRD CAR 118-119, the 2017 issuance that was triggered by the Chiapas earthquake IBRD / FONDEN 2017, the 2012 cat bond that paid out after hurricane Patricia MultiCat Mexico Ltd. (Series 2012-1), the 2009 issued MultiCat Mexico 2009 Ltd., and the 2006 issuance CAT-Mex Ltd., can all be found in our extensive catastrophe bond Deal Directory.

PGGM added $355m to Vermeer Re investment in 2019, to hit target $1bn cap

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PGGM, the Dutch pension fund investment manager and the largest investor in the insurance-linked securities (ILS) space, made good on its option to upsize its allocation to Vermeer Reinsurance Ltd., the joint-venture vehicle that is managed by RenaissanceRe, taking Vermeer’s total capitalisation to over $1 billion in 2019.

Vermeer Reinsurance Ltd. (Vermeer Re) was launched in time for the January 2019 reinsurance renewals, as RenaissanceRe (RenRe) teamed up with long-time insurance-linked securities (ILS) institutional investor PGGM to launch the first managed and ‘A’ rated reinsurance vehicle for a single pension fund investor.

Vermeer Re began life with an initial capitalisation of $600 million, funded by PGGM on behalf of one of the pensions it administers, the Dutch healthcare and social welfare sector’s PFZW pension.

PIMCO adds almost $26m more to its ILS Series SPC fund vehicle

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Giant asset manager PIMCO has raised and deployed more funds into its Cayman Islands based ILS Series SPC fund, taking total insurance-linked assets within one segregated fund account to $51.8 million and overall assets in the vehicle to just over $150 million.

PIMCO (Pacific Investment Management Company LLC), the investment management arm of insurance giant Allianz S.E. that commands around $1.76 trillion of assets, launched the PIMCO ILS Business in January 2019, appointing Rick Pagnani to lead the new insurance-linked securities (ILS) operation.

The new ILS unit of PIMCO has been steadily building out a team and platform and was ready to begin more active underwriting operations as of the start of 2020.

 

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The World Bank has helped two more countries join those benefiting from a source of catastrophe contingent disaster risk financing, as both Vanuatu and Grenada become the latest to receive a Catastrophe Deferred Drawdown Option (Cat DDO) arrangement.

The World Bank continues to deliver these catastrophe contingent risk financing solutions to countries exposed to peak perils as a way to introduce them to contingent disaster risk finance and insurance or reinsurance related arrangements.

The Catastrophe Deferred Drawdown Option (Cat DDO) is now one of the staple sources of capacity for countries interested in disaster risk financing, thanks to the help of the World Bank.

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Innovative insurance and reinsurance mechanisms such as catastrophe bonds, risk pooling facilities and parametric triggers are all key ways that risk mitigation can be improved in the world’s most vulnerable areas, Aon said today.

The insurance and reinsurance broker highlighted the continuing issue of the protection gap and the need for society to build greater resilience against catastrophes.

Just in the last decade, natural catastrophes have driven global economic losses amounting to US $2.98 trillion, Aon’s data shows.

PGGM grows ILS portfolio 16% to ~$6.5bn in 2019, adds new reinsurance partners

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PGGM, the Dutch pension fund investment manager and the largest single source of assets in the insurance-linked securities (ILS) market, has grown the size of its ILS portfolio by roughly 16% in 2019, to reach around US $6.5 billion of assets and also added two new reinsurance partners during the year.

PGGM has continued to broaden the breadth of strategies that it allocates to in the ILS and reinsurance sector in recent years, becoming an increasingly important source of assets for the market as a whole.

The pension fund investment manager, that looks after allocations to the ILS and reinsurance market on behalf of one of the pensions it administers, the Dutch healthcare and social welfare sector’s PFZW pension, entered 2019 with around EUR 5 billion of assets under management, but lifted that figure throughout the last year to EUR 5.8 billion (around US $6.5 billion at the end of 2019).