2023 was generally a good year for the insurance-linked securities asset class. On this basis, the Solidum ILS and Cat Bond funds were able to achieve an exceptionally attractive performance. The Solidum Cat Bond Fund and Solidum ELS, SAC3 ended the period with their best annual results. The Solidum ELS, SAC2, with its long performance history dating back to 2006, shows that the year is not a singular event after all.
On the first day of the new year 2024 a strong Mw 7.5 (Mj 7.6) earthquake occurred on Japan's west coast with an epicenter on the northern Noto Peninsula. This tremor was the strongest shake to affect Japan in nearly one decade.
Initial expectations of the earthquake's financial impact on the insurance industry were published over the following days and put this event in the mid-single digit USD billions insured loss.
On October 25, at 1:25 local time, East Pacific hurricane Otis made landfall in the Mexican state of Guerrero, near Acapulco de Juáres, as a Category 5 storm, the highest level on the Saffir-Simpson Scale. After landfall, the system quickly weakened over Mexico’s mountainous terrain and subsequently dissipated.
On August 30, at 7:45 local time, Idalia made landfall as a Category 3 hurricane in Florida’s sparsely populated ‘Big Bend’ region near Keaton Beach. The storm continued to track in a northeasterly direction, quickly weakening over land, and passed over Georgia and South Carolina, where it came offshore again on 31 August with tropical storm wind strength.
During the first weeks of August, devastating bush fires affected the island of Maui, Hawaii. The catastrophe claimed the highest death toll of all bush fires in the US since 100 years and is estimated to be the second most expensive insurance event in the history of the state of Hawaii.
An impact on the Solidum cat bond and ILS funds is not expected.
For further information we would like to refer to the linked event report.
In the first half of 2023 the ILS market and its cat bond sub-segment delivered very pleasing returns. The article explains the reasons that lie behind these dynamics and what the development means for investors interested in the asset class today, mid-year 2023.
This article, written on invitation by the German trade journal 'Die VersicherungsPraxis', was published in the 12/2022-01/2023 issue of the journal. Addressing institutional insurance buyers rather than the ILS investor community, Solidum’s managing partner Dr. Karsten Bromann discusses the potential of cat bond instruments for the risk transfer from industrial insurance buyers to the capital markets. The paper covers current challenges and gives an overview of successful historic transactions.
The year 2022 was challenging for investors in many asset classes, with inflation reaching new hights and return expectations rising globally in most markets. Cat bonds and private ILS were not immune to this market shift. However, they managed to perform remarkably well during these demanding times. The impact of Hurricane Ian in Florida in September further strengthened the momentum towards improved market conditions in the ILS asset class. At the beginning of 2023, the ILS market is thus as attractive as it has not been seen in a decade.
Already in the first half of 2022 the attractiveness of the cat bond market improved, with yields rising to levels not seen since the end of the credit crisis. Hurricane Ian's impact on the reinsurance industry gave a boost to this trend. The briefing provides additional background on the current market dynamics.
Major hurricane Ian hit Florida as an upper-level category 4 storm, causing significant humanitarian and economic loss. The destruction caused by the storm will noticeably affect the reinsurance and ILS markets. The present loss report discusses the storm and provides, from a perspective shortly after the event, a preliminary analysis of its impact on the reinsurance industry and the portfolios of the Solidum funds.