Month: June 2024

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Kin Insurance has increased the amount of catastrophe reinsurance limit it will have in-force for the hurricane season by 16% for Florida risk alone, growing its reinsurance tower for that state to $1 billion.

kin-insurance-logoAt the same time, signalling continued expansion for the insurtech writer, Kin Insurance has also secured a $145 million catastrophe reinsurance tower for exposures in other states at the June 2024 renewals.

A year ago, Kin Insurance secured $860 million of reinsurance for Florida catastrophe events and was covering just the Kin Interinsurance Network up to the one-in-200 year return period level.

That came soon after Kin sponsored its first catastrophe bond, a $100 million Hestia Re Ltd. (Series 2023-1) deal, which is a component of the Florida reinsurance tower.

For 2024, the Hestia Re cat bond remains in-force and that multi-year coverage will have been helpful as Kin upsized its renewal this year.

Kin said its new reinsurance arrangements cover its “expanding market footprint,” and balance the robust growth plans of the underwriter with a prudent approach to risk management.

Citing “favorable economic terms”, Kin has secured $1 billion in reinsurance coverage for natural catastrophes in Florida, which it said represents protection of up to a one-in-160 year first-event loss.

It’s perhaps notable and reflective of Kin’s growth in Florida, that the larger reinsurance tower only covers the insurer to a lower return-period than the 1-in-200 year level it was protected to a year ago.

In addition, the company has purchased $140 million in coverage for catastrophe events outside Florida as well, which it said is also well in excess of the required rating agency requirements.

Kin also said that its renewed reinsurance program is backed by a consistent panel of  over 35 industry-leading reinsurers, all rated A- or higher by AM Best, or providing 100% collateralized reinsurance protection.

“We’re pleased to have again completed our reinsurance program in a timely and responsible manner,” Angel Conlin, chief insurance officer at Kin said. “The continued support from our reinsurance partners validates our data enabled and technology-driven underwriting and responsive claims handling.”

Kin lifts Florida reinsurance tower 16% to $1bn, gets $140m for other states was published by: www.Artemis.bm
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Cayman headquartered reinsurance company Oxbridge Re has reported that the firm’s first series of tokenized reinsurance sidecar securities have now realised a 49% return for the investors backing them, surpassing both initial and updated expectations.

oxbridge-re-token-suranceplusOxbridge Re launched its Web3 startup SurancePlus in 2022, raising $2.4 million through a sale of the first series of digital or tokenized reinsurance securities, which were named DeltaCat Re.

That $2.4 million of capital was put to work in support of collateralized reinsurance contracts underwritten via the reinsurer’s sidecar structure, Oxbridge Re NS.

The securities represent fractionalized interests in reinsurance contracts written by the reinsurance sidecar vehicle, Oxbridge Re NS, which enters into quota share arrangements with its parent.

As a result, the investors benefit from a return through the performance of the underlying reinsurance contracts that the sidecar held for the underwriting year, which ends at the mid-point of 2024.

Oxbridge Re had been anticipating that investors in the first series of tokenized reinsurance securities would receive a roughly 42% return for the first treaty year.

A few months later, Oxbridge Re CEO Jay Madhu explained that he anticipated a higher return for the sidecar securities investors, saying that it could be 45% for the latest treaty year.

Now, the company has reported today that SurancePlus earned a 49.11% return on its tokenized reinsurance security, DeltaCat Re far exceeding the initial projection of 42%.

Jay Madhu, President and CEO of Oxbridge Re, commented, “Last year, SurancePlus enhanced Oxbridge Re’s special purpose vehicle, Oxbridge Re NS, by integrating digital innovations and insights by offering an RWA tokenized security, thus making reinsurance more accessible as an alternative investment through the Avalanche blockchain. We are pleased with the impressive returns for DeltaCat Re token investors.

“Looking ahead, we are excited about the long-term prospects of our business as we approach the close of our capital raise for the 2024/25 EpsilonCat Re Token.”

Oxbridge Re began that process of raising up to a $10 million target for the EpsilonCat Re tokenized reinsurance securities that will be issued by its subsidiary SurancePlus Inc. and provide investors a way to participate in the 2024/25 underwriting treaty year of the Oxbridge Re NS sidecar structure.

Back in 2019, Oxbridge Re’s sidecar returned 36% to its investors in a catastrophe loss free year.

The 49% earned in the most recent treaty year is therefore both impressive and a reflection of the hard reinsurance market and much improved terms now available in the marketplace.

As we reported yesterday, Oxbridge Re has announced that it is considering “strategic alternatives” for the business, including a potential sale or merger, various capital actions, or even spinning out its tokenized reinsurance investments unit.

So the future is not yet clear for Oxbridge Re, or its strategy to leverage digital asset architecture to facilitate fractionalised investments in its reinsurance sidecar vehicle, but the stellar returns generated for investors should help the company attract attention.

Oxbridge Re’s tokenized reinsurance sidecar securities realise 49% return was published by: www.Artemis.bm
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Oxbridge Re Ltd., the Cayman Islands based reinsurance company, has announced today that it is considering “strategic alternatives” for the business, including a potential sale or merger, various capital actions, or even spinning out its tokenized reinsurance investments unit.

oxbridge-re-token-suranceplusOxbridge Re launched what it calls its Web3 startup SurancePlus back in 2022, since when it has been issuing tokenized reinsurance securities, that effectively give investors a way to access the returns of its catastrophe focused reinsurance business.

Previously, Oxbridge Re had been operating a typical collateralized reinsurance sidecar, alongside its own collateralized balance-sheet.

But the SurancePlus strategy sought to take advantage of digital securities technology, to provide an alternative access point for investors, utilising blockchain type infrastructure.

When we last reported on the company, Jay Madhu, the Chairman and Chief Executive Officer of Cayman headquartered reinsurer Oxbridge Re, had said that the firm’s first series of tokenized reinsurance sidecar securities were set to deliver investors a 45% return, surpassing the initial expectation of 42%.

The securities represent fractionalized interests in reinsurance contracts written by Oxbridge Re’s reinsurance sidecar vehicle, Oxbridge Re NS, which enters into quota shares with its parent.

So the investors access a return through the performance of the underlying reinsurance contracts that sat in the sidecar for the current underwriting year, which runs to the mid-point of 2024.

Today, Oxbridge Re said that its board of directors has “initiated a process to evaluate strategic alternatives to maximize shareholder value.”

Explaining that, “As part of the evaluation process, the Company will consider a full range of strategic alternatives for the Company, and/or its Web-3 division subsidiary SurancePlus Holdings Ltd, including a sale, spinout, merger, divestiture, recapitalization, and other strategic transactions, or continuing to operate as a public, independent company.”

CEO Madhu further said, “To reinforce our strategic vision, we are committed to exploring opportunities that will deliver value to our stakeholders and ensure continued success in our evolving industries.”

The company further said that it cannot guarantee that the evaluation of strategic options will result in any deal or transaction.

Oxbridge Re has never really scaled into a particularly meaningful reinsurance player. But its tokenized reinsurance securities are the first and only such tech-focused initiative to come out of the traditional reinsurance market and so could prove attractive to players that consider this a viable approach to partnering with investors and bringing alternative capital into an underwriting business.

Oxbridge Re considering “strategic alternatives” including sale or merger was published by: www.Artemis.bm
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Broking group Lockton has announced the hiring of Paul Jones from Descartes Underwriting as its new Head of Parametric Solutions (UK & Europe) within its Property & Casualty (P&C) Specialties division.

paul-jones-lockton-parametricLockton is the latest broker to bolster its parametric risk transfer proposition recently, with this new hire, bringing onboard an experienced, commercially focused specialist in the space to lead activities in the UK and Europe and work alongside its international teams.

Jones will report to Andrzej Danyluk, Head of International Property, and Diego Monsalve, who serves as LatAm Head of Parametric Solutions, and will be tasked with further developing and growing Lockton’s parametric proposition, working alongside other parametric and alternative risk transfer specialists from Latin America, USA, AsiaPac and the UK.

His most recent position was at tech-focused parametric company Descartes Underwriting, where he served as Commercial Director for the UK and Ireland and worked for more than two and a half years.

Prior to that, Jones spent over 10 years at AXA XL and before that AXA Corporate Solutions, in a variety of P&C focused roles.

Danyluk commented on the new hire, “We are delighted to welcome Paul to Lockton, to build our European Parametric business. Paul is considered an industry leader in this field and his arrival will provide us with the platform to enhance our offering to both existing and prospective clients around the globe. This is a huge area of opportunity for Lockton and, as a result of growing demand in our Specialty businesses, Paul’s knowledge, experience and creativity will further enhance our ability to serve clients in an ever-evolving risk landscape.

“As Lockton continues to grow its international presence, this gives us greater ability to work seamlessly with our teams around the world to support our clients and partners by creating new products, supported by the best analytics and executed in a growing global marketplace.”

Jones added, “I am thrilled to be joining Lockton to develop its Parametric proposition to clients. It is a really exciting time to come on board and I look forward to working with Lockton’s specialists across the globe to develop the most innovative solutions for clients. The opportunities for growth are unparalleled and I am excited to build on the team’s momentum. I can’t wait to get started.”

Lockton hires Jones from Descartes to lead parametric in UK & Europe was published by: www.Artemis.bm
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The California Earthquake Authority (CEA) has maintained its reinsurance and catastrophe bond tower at $9.1 billion in size through the start of 2024, with its most recent renewals for April 1st seeing the insurer securing almost $1.2 billion in protection.

cea-california-earthquake-authorityWhen we last covered the CEA, we reported that the group had reached December 31st 2023 with $9.1 billion of protection in-force from its reinsurance and cat bonds.

That was based on end of year data and the CEA had a significant reinsurance renewal at January 1st as well, but we’ve now learned that the earthquake insurer has come through that and April renewals and maintained the same level of catastrophe risk transfer protection.

Renewing such a large risk transfer program is not without its challenges and the CEA has said before that its risk-transfer costs and the amount of risk transfer needed are its largest financial headwinds.

For full-year 2023, the CEA’s risk transfer expenses reached $585 million, which was up 18% on the previous year, as the effects of the hard reinsurance market took hold.

Managing that means needing more rate coming in on the inward earthquake insurance side of the CEA’s business, but the Authority is also very tactical in its reinsurance and catastrophe bond buying as well, as it looks to manage market cycles.

Back in March, the CEA’s leadership team heard that the risk transfer market was “modestly improving”, which helped it increase its overall reinsurance and cat bond tower to around $9.1 billion for the start of 2024.

The CEA’s approved risk transfer budget is also set at just under $585 million for 2024, of which by April 30th 37.6% or just over $220 million has been used.

At the key 1/1 reinsurance renewal this year, some $2.2 billion of the CEA’s reinsurance contracts in-force were due to expire and it appears were more than renewed, with over $2.57 billion of reinsurance secured at January 2024.

After April 1st, which is one of the CEA’s larger reinsurance renewal periods, the size of the risk transfer tower has not changed, with still $9.1 billion of reinsurance and cat bonds in-force at that time.

At the recent April renewal, the CEA secured just under $1.16 billion in new reinsurance, helping to maintain its risk transfer program at the same stature it had reached at the end of 2023.

Which means the CEA has renewed $3.73 billion of reinsurance in 2024 so far.

The CEA has not sponsored a new catastrophe bond since last December, so as of today, the CEA still has $2.27 billion of outstanding catastrophe bond coverage, as you can see in our cat bond sponsors leaderboard where the CEA is in 5th position currently.

But catastrophe bonds remain a very significant contributor to the CEA’s risk transfer arrangements, while the insurer also utilises other ILS market solutions in fronted reinsurance form, we understand.

View details of every catastrophe bond sponsored by the CEA in the Artemis Deal Directory.

The CEA’s reinsurance tower had shrunk to around $8.2 billion after the January 2023 renewal, and still remains smaller than the $9.44 billion high it reached at the end of 2021.

The CEA now has another $85.5 million of reinsurance that expired at the end of May 2024 and a further almost $800 million of reinsurance cover expiring before the end of July this year.

So we expect the CEA will be busy in the market at this time, renewing and replacing much of this expiring protection and it will be interesting to see if the tower grows when the next data becomes available to us.

Finally, the CEA’s next catastrophe bond maturity is scheduled for the end of November this year, so it will be interesting to see if the insurer comes back to market to replace that $215 million Ursa Re II Ltd. (Series 2021-1) issuance.

With the cat bond market keen for diversifying risks at this time, given the US wind heavy issuance we’ve seen, a new cat bond from the CEA might be welcomed and could receive a positive investor response.

View details of every catastrophe bond sponsored by the CEA in the Artemis Deal Directory.

CEA risk transfer tower stable at $9.1bn after near $1.2bn April renewal was published by: www.Artemis.bm
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New Zealand’s EQC Toka Tū Ake, previously known as the New Zealand Earthquake Commission, has added more limit to its reinsurance tower, lifting the top by $1 billion for 2024, in a renewal securing $9.2 billion of cover for disaster losses in the country.

tina-mitchell-new-zealand-eqcThe EQC has been growing New Zealand’s disaster reinsurance protection over recent years, from a nearly $7 billion reinsurance tower in 2021, to $7.2 billion for 2022, then $8.2 billion for 2023.

Typically, a number of insurance-linked securities (ILS) funds participate, taking a small share of the reinsurance program on a fronted basis in recent years.

But, of course, the EQC also made its first foray into the catastrophe bond market in 2023 and that NZ $225 million Totara Re Pte. Ltd. (Series 2023-1) catastrophe bond is still in-force and part of the reinsurance tower this year.

A driver for more reinsurance being required by the EQC has been the doubling of the building cover cap enforced by New Zealand’s government, which occurred in late 2021.

The use of reinsurance to support the EQC helps to keep homeowners insurance more affordable, by providing capital to finance recovery after major natural disasters occur and aggregating New Zealand disaster risk to distribute it to international reinsurance and capital markets.

“The continued growth of the programme demonstrates the confidence the international market has in our national insurance scheme,” explained EQC Chief Executive Tina Mitchell.

“Once again, we have been really well supported by our reinsurance partners, with many substantially increasing the amount of capital they have committed to the programme.”

Mitchell went on to explain that the increased interest in the reinsurance renewal seen this year included both existing partners increasing their offering, as well as offers from new and returning markets.

“It is always encouraging to see partners returning to the programme and new reinsurers wanting to support our scheme.  We see this as a huge vote of confidence in New Zealand and our approach to natural hazard risks,” Mitchell added, reiterating that securing reinsurance is one of EQC’s primary tasks.

She explained, “New Zealand homeowners pay an EQC levy of up to $480 (plus GST) for the first $300,000 of natural hazard damage to their homes.

“We use some of that levy to buy reinsurance so we can be confident there are always funds available to meet any claims that may arise. This keeps the scheme affordable for homeowners and protects the Crown from financial risks in the event of a major event like the Canterbury earthquakes.”

The EQC’s reinsurance coverage only attaches after a loss event that results in over $2.1 billion in claims and is seen as a financial buffer for the nation’s economy.

The reinsurance tower has only attached is cover twice in history, after the Canterbury earthquakes in September 2010 and February 2011, when EQC received about half a million claims which are currently estimated to cost around $12 billion.

“Most of the time the EQC scheme is able to cover events, even the bigger events like Cyclone Gabrielle, through levies, but reinsurance protects New Zealand from any future devastating events and helps to ensure we will be able to pay claims when they fall due,” Mitchell said

“We can’t change the natural hazards we live with in our beautiful country, but we can prepare ourselves to reduce the impact of those hazards and provide a safety net to help New Zealanders recover from any major event.”

NZ EQC adds $1bn to reinsurance tower, securing $9.2bn for 2024 renewal was published by: www.Artemis.bm
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