May 2012/1

With a strong showing at the mid-year renewals, the convergence sector now has a 14 percent market share of global cat reinsurance limit placed - signifying a watershed in its development, according to Guy Carpenter vice chairman David Priebe.

Pricing continued to move up in the retrocession markets into June despite the pace of reinsurance rate increases tailing off, broker Guy Carpenter said in its report on the June renewals.

Global reinsurer Scor has topped-up the amount of event-driven contingent capital it can draw down on in response to large natural catastrophe losses to EUR 150mn, having triggered the first EUR75mn of its 2010 facility last year.

GC Securities has forecast possible ILS issuance of $7bn for 2012, joining a growing throng of bullish convergence managers as the strong new issuance pipeline continues.

Charles Collis and Michael Frith from Conyers Dill & Pearman look at the moving currents of "hard-wired" ILS structures

Most reinsurers are still talking up the mid-year US property cat market and insisting that the 10-15 percent rate increases seen at 1 January can be replicated, but the first cracks in the façade of market confidence have become apparent

Top legal experts in the ILS sector have been forced to switch law firms as Dewey & LeBoeuf, a former leader in the capital reinsurance markets, looks set to shut down

Industry investors said recent reinsurer start-ups such as Third Point Re and PaCRe might work for their hedge fund backers but questioned the rationale for other investors, speaking at an event hosted by sister publication The Insurance Insider this month

The US Jobs Act provision set to lift the ban on advertising for certain private placement offerings is on track for full enforcement by the US securities regulator on 4 July, according to insurance legal expert Michael Madigan

Industry losses from the Costa Concordia disaster are set to rise past the $1bn mark, putting marine industry loss warranties (ILWs) at risk of paying out

Tornado losses have reached $3.48bn for the 2012 season to date, including one $1bn+ event, Trading Risk understands

Greenlight: new entrants hinder market; Farmers renews contingent capital deal

An ILS fund is one of the partners behind Bermudian reinsurer Montpelier Re's growing stable of private sidecars, Trading Risk understands

AlphaCat, the third party funds management division of Bermudian reinsurer Validus, posted a $12.7mn profit for the first quarter as its managed gross premiums rose to $77.4mn for the period.

While assets under management in the ILS sector are likely to grow significantly the future market might not just be a bigger version of the present, said Nephila managing partner and co-founder Frank Majors.

Dexion Capital will seek to raise £100mn-£150mn from the IPO of its new London-listed ILS fund DCG Iris, the company told Trading Risk.

RenaissanceRe's weather and energy derivatives trading unit, RenRe Energy Advisors Ltd, posted a second consecutive quarterly loss after a winter that the company's chief underwriting officer Kevin O'Donnell described as "the temperature equivalent of a catastrophe".

Industry loss warranty (ILW) trading has been slow in May as the market concentrates on the key US wind-centric June and July renewals.

$30mn of hurricane options have traded on the Chicago Mercantile Exchange (CME) in the largest single order since 2009, taking the value of deals traded on the exchange this year to $45mn.

ILS traders are blaming strong primary issuance levels, seasonality and an increasingly US-wind exposed market for continued declines on the secondary cat bond market ahead of hurricane season.

The concentration of US wind risk in outstanding cat bond issuance has reached new peaks this year, causing balanced portfolio managers to seek diversifying instruments in the secondary market.

Secondary market demand for 2012 cat bonds has pushed pricing above par as cash-rich traders seek to deploy funds ahead of the wind season.

Two massive US wind deals have pushed second quarter cat bond issuance to $1.65bn, already surpassing the first quarter.

ILS fund manager Nephila Capital has bulked up its assets under management (AuM) by more than $1bn over the past year, shoring up its position at the top of the industry leader-board.