Wednesday, December 30, 2020

Re/Insurance, Cat Bonds: With Premiums Rising Blackstone Reenters the Biz

 Two from Artemis. First up, December 21:

ILS to go from strength to strength: Brad Adderley, Appleby

The twin, positive impacts of rising prices and much improved terms means that the hardening market environment isn’t going away anytime soon, suggesting ever-increasing success for the insurance-linked securities (ILS) space, according to Brad Adderley, senior partner in Appleby’s Bermuda office who has been involved in a significant number of ILS transactions.

Poised to surpass $16 billion for the very first time, annual catastrophe bond and related ILS issuance in 2020 is set to break numerous records.

Excluding a slight lull during the height of the Covid-19 pandemic earlier in the year, the catastrophe bond segment once again showed its resilience to financial market turmoil and volatility.

“Cat bonds are booming and I don’t think that’s going to be any different for next year,” said Adderley, in a recent interview with Artemis. “As it’s becoming more mainstream, people are getting more comfortable with it and, as more corporations like Alphabet (Google) enter the space, others look at that and think, ‘maybe this is something we need to consider.’”

Alphabet Inc., the parent of Google, sponsored its first catastrophe bond in November, a $237.5 million California earthquake transaction. Owing to the success of this placement, the company returned in December with an additional $95 million deal also covering earthquake risk in the State of California.

“The Alphabet and the Bayview transactions this year, which Appleby worked on, are all big deals because you see non-insurance entities, corporates, entering the space in a big way. It’s not like a $50 million deal, it’s $300 million and more. And, so, I think that creates its own natural following.

“People always said for cat bonds to grow we need new products. Well, although that’s nice, is it actually more to do with needing more sponsors and more deals? So, now that Google’s done it, what other large corporates are going to be thinking the same way?” continued Adderley....


And , December 28:

Nephila gets allocation from Blackstone multi-strategy fund

Nephila Capital, the largest dedicated manager of insurance and reinsurance linked securities, has been given an allocation for its sub-advisory role on one of giant asset manager Blackstone Group’s multi-strategy investment funds.

Nephila Capital has been a sub-advisor to the Blackstone Alternative Multi-Strategy Fund for a number of years, but hasn’t actually managed an allocation from the fund for some time.

Blackstone Alternative Asset Management, the hedge fund solutions group of Blackstone which has around $78 billion of investor assets under management, first added Nephila Capital as a sub-advisor to one of its multi-manager alternative investment funds back in 2013.

However, Blackstone reduced its allocation to reinsurance in its multi-manager portfolio’s back in late 2014, as it said that the risk/reward profile of the reinsurance and insurance-linked securities (ILS) space had been ‘significantly altered’ due to the strong capital inflows into the market.

For a number of years now, Nephila Capital has been listed as an inactive sub-advisor to the Blackstone multi-strategy and alternative focused investment fund, with no allocation mentioned in the fund filings as recently as in November.

But now, in a new filing made yesterday, the Blackstone Alternative Multi-Strategy Fund prospectus states that, “The Fund’s adviser, Blackstone Alternative Investment Advisors LLC, has allocated a portion of the Fund’s assets to an existing sub-adviser, Nephila Capital Ltd.”...