Insurance-linked securities: Embracing catastrophic risks

 

ORIGINAL PUBLICATION HERE 

Insurance-linked securities (ILS) are an asset class based upon insurance events. They provide an element of diversity to portfolios. Put simply, a market collapse is unlikely to be correlated to a natural disaster.

 

 

New to ILS, cat bonds and insurance linked investments?

 

artemisORIGINAL PUBLICATION BY ARTEMIS HERE 

As the asset class covering insurance linked securities and reinsurance linked investments grows, new readers may be looking for simple explanations of some of the key topics Artemis covers.

 

 

MarketView Reinsurance companies dealing with ART, catastrophe bonds and weather risk management

 

 

Innovative Risk Financing in DRR: Catastrophe (CAT) Bonds

 

 

“Investing in Hurricanes” by Adam Alvares

 

Insurance Linked

 

 

ORIGINAL PUBLICATION HERE 

A very good fundamentals explanation from an online resource for catastrophe bond and insurance linked investments.

Reinsurance is not complicated but it is full of jargon. This 50 page booklet explains the key ideas that are necessary to make an informed investment in insurance linked funds. Introduced by the former partner responsible for the Goldman Sachs catastrophe bond business, the guide systematically explains the funds and their underlying assets.

 

 

Catastrophe Bonds – A to Z

 

A reader of this publication, the president of an insurance agency, recently wrote to say he kept hearing about catastrophe bonds but had little knowledge of what they were. He was curious if these instruments would replace traditional reinsurance and was particularly concerned about a scenario that would result in the catastrophe bond market’s collapse, resulting in widespread financial problems for primary insurers and economic calamity…..

 

 

Introduction to Cat Bonds by Entropics Asset Management

 

 

 

  巨灾债券

巨灾债券(Catastrophe Bond或Act of God bond),又称为天意债券或CAT债券,属于ART(Alternative Risk Transfers)常见的形式之一。

巨灾债券是指债券公开发行后,未来债券本金及债息的偿还与否,完全根据巨灾损失发生情况而定。即买卖双方通过资本市场债券发行的方式,一方支付债券本金作为债券发行的承购,另一方则约定按期支付高额的债息给另一方,并根据未来巨灾损失发生与否,作为后续付息与否及期末债券清偿与否的根据。

 

 

Swiss Re: What is parametric insurance?

In recent years, product innovation and data analytics have expanded the scope of commercial insurance solutions to offer coverage for a wider range of threats, exposures and perils. With its transparent and fast claims payment and ability to offer a payout without actual physical damage to an asset, parametric or index-based solutions are often brought to the table of discussion when covering hard to insure risks.

From conversations with brokers and clients we’ve found that while there’s significant interest, there’s still some confusion around the concept of “parametric insurance” – what it is and how it works. Therefore, in this first article of the series we aim to shed some light on the concept….

 

 

Swiss Re: 10 myths about parametric insurance

In our last article “What is parametric insurance?” we established the basics of what a parametric insurance solution is – its key attributes, how it works and what makes it different from a traditional insurance solution.

However, we often hear a number of misconceptions about parametric or index based insurance solutions. In this article, we wanted to set the facts straight about the top 10 myths that we often come across when presenting parametric insurance solutions to clients….

 

Parametric or index-based insurance is an innovative solution for corporate clients looking for balance sheet protection that traditional insurance products can’t provide. 

Parametric structures have been used with catastrophe bonds for the reinsurance market for over 30 years now. Since the 1990s, advances in data analytics, computing power and the need for product innovation to cover a broader range of risks have driven an increase in discussions with corporate buyers around insurance products that rely on a parameter or index threshold as a trigger for the policy. These products were first used only by the largest corporate and public entities to deal with major black swan events such as hurricanes and earthquakes. In recent years, parametric products have evolved in sophistication and pricing such that even mid-market and smaller corporate clients are making use of them. Some insurers have even experimented with retail products for consumers in some jurisdictions. For brokers looking to expand their toolbox, parametric insurance products are an innovative solution in a world where weather-related natural catastrophes appear to be increasing in frequency and severity—and potentially driving a hardening market…..