Insurance-linked safety rates rise slightly, Sandy’s yields recover in Q4: Lane Financial


The final quarter of 2012 saw the average online trading rate for insurance-related securities and catastrophe bonds increase somewhat after experiencing declines for much of the year, according to the latest quarterly update. of the ILS ILS market, cat bond and reinsurance. Lane Financial LLC advice. This could have been an effect of Hurricane Sandy and it will be interesting to observe the trajectory of this metric over the coming year.

We always look forward to Lane Financial’s ILS Market Reports as it contains an in-depth statistical view of the outstanding ILS and Catastrophic Bond market using its own Lane Financial Insurance Performance Index. This index measures the performance of the outstanding ILS and catastrophic bond market and online pricing data derived from actual ILS activity and catastrophic secondary market bonds.

In this article, we’ll take a look at two of the charts from the Fourth Quarter ILS Market Report, Lane Financial’s synthetic online rate metric that takes data from the ILS and ILW markets to create an index that gives a reasonable approximation of premiums paid. (or online rate) for transactions. The other measure is market return, for which we’ll look at Lane Financial’s monthly total return chart which gives a good proxy for investor performance through the end of 2012.

After experiencing a sharp decline until the end of the third quarter of 2012, the online rate measure rebounded slightly in the fourth quarter. Lane Financial’s online synthetic rate index rose just over 2% in the fourth quarter. This small change could be a reaction to Hurricane Sandy, with investors demanding a slightly higher premium for their investments, or it could just be a small rebound, with the market acknowledging that prices had hit a new low in the month. over the past two years. It will be interesting to see where this metric goes in the months to come. Many observers expect rates to remain low as the capital interest in ILS remains high on the part of investors.

ILS synthetic online rate index – Source: Lane Financial LLC

The second metric we look at in this article is the total return performance of the Lane Financial All CAT ILS Index. This index clearly shows the impact of Hurricane Sandy on catastrophic bond yields at the start of the fourth quarter, but it is also evident that the strong recovery occurred as soon as the catastrophic bond market identified that the losses seemed unlikely. This total return index recouped most of the Sandy impact at the end of the fourth quarter and looked set to start 2013 on a bullish path.

Total monthly yield of all CAT ILS

Monthly total return of all CAT ILS – Source: Lane Financial LLC

We will cover more information from the Lane Financial report in the coming days.

You can download a full copy of the ILS Quarterly Market Report from Lane Financial’s website where you will need to register to download a copy.

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