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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).

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City of 15 million is on a fault line rocked by a series of temblors

Istanbul, Turkey’s biggest city with 15 million people, should prepare for an earthquake of magnitude 7.5.

That was the chilling prediction of Interior Minister Suleyman Soylu after the temblor measuring 6.7 that killed dozens of people Jan. 24 in Elazig province, 750 miles from the nation’s economic heartland. A quake as strong as 7.5 could level buildings and cause tens of thousands of deaths.

The Elazig convulsion, and a much smaller tremor this week, add urgency to warnings by officials and scientists of a calamity. Istanbul sits at the western extremity of the Northern Anatolian Fault Zone, which divides Turkey horizontally and has been hammered by seismic activity since the 1939 Erzincan quake, magnitude 7.2. Five major tremors since then have each been further to the west. The epicenter of the destructive Marmara temblor in 1999 — magnitude 7.6 — was just 70 miles from Istanbul.

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The human cost of disasters is not just measured in the deaths and injuries that they cause, but also in terms of their lasting economic impact on survivors and countries. Natural disasters don’t just destroy homes, factories, shops, and fields; they can altogether annihilate years of economic growth, which is essential for developing economies.

That is why disaster risk financing, especially when it comes to post-event response, plays a vital role in developing economies across the globe. Financing that strengthens the management of risks associated with exposed assets, lessening the vulnerability of people and property, improves the management of land, water, and the environment.

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Establishing a national disaster insurance scheme is one of the main features of the UNDP’s NAP for Bosnia & Herzegovina. Improving BiH’s preparedness for dealing with Nat Cat events is instrumental considering the expected increase in flood losses and the very low current insurance coverage.

Over the past eighteen years the country has had 7 years of drought and 5 years of flooding, specifically in 2014 when major flooding caused damages equivalent to 15% of the country’s GDP for that year, an article prepared by the UNDP reads. Moreover, according to the European Environment Agency, annual flood losses in BiH are expected to increase five-fold by 2050 and up to 17-fold by 2080.

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