News in brief
The summer months can be a quiet period in the markets but there were a number of interesting stories affecting ILS, with some significant hirings and promotions in particular. Bermuda:Re+ILS provides a roundup of some of the top stories that have made the news.
Mike Krefta, the chief executive officer of Hiscox Re & ILS, will leave the company in early 2021 to return to the UK.
Krefta has been with Hiscox for almost 17 years, four of them in Bermuda. He became the CEO of Hiscox Re and ILS, and CEO of Hiscox Bermuda, in August 2017. Before that he was chief underwriting officer of Hiscox Re.
Nicholas Jagoda has joined Aeolus Capital Management as a partner and portfolio manager. He joins from Elementum Advisors where he was a partner and portfolio manager.
Bermuda-based Aeolus manages capital on behalf of investors in the property catastrophe reinsurance and retrocession market and has over $4 billion in assets under management.
Jagoda first became involved with investments in collateralised reinsurance when he joined Stark Investments in 2006. He was part of the original team that launched Elementum in 2009 and helped found Elementum (Bermuda) in 2011.
Elementum Advisors, the Chicago and Bermuda-based alternative investment manager specialising in collateralised natural event reinsurance, has hired Jeff Davis as senior vice president of investments. Davis joins from Aon Securities.
Paul Barker has been promoted to the executive committee as its fourth member, after nearly 10 years with the firm. Barker is a partner and portfolio manager and joins the committee’s existing members, founding partners Tony Rettino and John DeCaro and managing partner Mike France.
Elementum has appointed Jake Weber, a partner, to lead its newly formed analytics department, which is responsible for evolving the asset manager’s view of risk through dedicated research, and providing peer review and support of the firm’s transaction modelling efforts.
It has named Catherine Malloy Cummings as its chief administrative officer to streamline and enhance its administrative functions. Cummings joined the firm in 2019 as chief human resources officer and previously served in HR functions at IMC Financial Markets and the Federal Reserve Bank of Chicago, among others.
The retro segment has been particularly badly affected by severe losses from catastrophe events in recent years, and the resulting trapped capital, according to a report by AM Best.
The report, “The ILS Retro Market, COVID-19 and Pre-Emptive Trapping”, said the fallout of recent and heavy insured loss years, and the uncertainty about loss exposure from recent catastrophe events, has led to investors holding back capital. This has created dislocation in the retro market, it said, with capacity tightening and rates spiking.
This trend, which results from events such as Hurricane Irma in 2017, Typhoon Jebi in 2018 and California wildfires, has contributed to rate increases of up to 30 percent for July renewals, according to AM Best’s discussions with ILS market participants.
The retro market is estimated at $20 billion, according to AM Best, with the ILS market supplying approximately 75 to 80 percent of the capacity for this segment.
New issuance spread in the ILS market has widened by 20 to 30 percent due to the impact of the COVID-19 pandemic, according to the latest report on the ILS market by Swiss Re.
The ILS market saw a record-breaking $3.96 billion in new issuance during Q1 2020, despite the disruption to the market in March, Swiss Re said. The market then picked up again later in Q2 after the initial market volatility resulting from the emergence of COVID-19. The market ultimately saw $6.75 billion of new issuance for the first six months of the year.
Despite this, the ILS market has shrunk by 1.35 percent since the end of 2019, measured by notional outstanding. A multitude of maturities and payouts for the events of 2017 and 2018 have outweighed new issuance, Swiss Re explained.
Swiss Re noted that the ILS sector had seen tightening spreads in January and February, with the sector flush with capital. That dynamic quickly changed once the implications of the pandemic and the resulting economic shutdown became clear, with investors seeing cheaper and higher-yielding assets elsewhere in March. That caused new issuance to freeze and spreads on new issuances to follow the trend of the secondary market.