INSURANCE LINKED SECURITIES

GAIN A COMPREHENSIVE VIEW OF RISK ACROSS THE ILS MARKET

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RMS: THE LEADER IN GLOBAL CATASTROPHE RISK MANAGEMENT

While catastrophes are unpreventable, their affects can be managed through the right risk-mitigation decisions, physical protections, and cutting-edge data and science. See how RMS advanced modeling techniques enable individuals, companies and governments to quantify and reduce their risk with confidence.

SEE HOW PEOPLE PARTNER WITH US:

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RISK TRANSFER ADVISORY

Expert risk analysis for all perils to support catastrophe bonds and private placements

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ILS PORTFOLIO ANALYTICS

A comprehensive and consistent view of risk across all insurance-linked investments to support investment and risk management decisions

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SPOTLIGHT

WHAT ARE THE TECHNOLOGY DRIVERS OF ILS GROWTH?

In February 1, I had the opportunity to speak at a panel session entitled “Technology as a Driver for ILS Growth” at the Artemis ILS Conference in NYC.  It was a full house, with 350 attendees from across insurance, banking and financial…

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THE SUM OF ITS PARTS: WILDFIRE IN MULTI-PERIL CATASTROPHE BONDS

Water, wind, and wildfire. It’s been a devastating three months for the U.S. Total insured losses from Hurricanes Florence and Michael, and the Camp and Woolsey wildfires are estimated by RMS in the range US$18.6 billion to US$28 billion…

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FROM FARMER TO FINANCE MINISTER

When I was still a teenager – summer brave, full of sport, hot and bold – I hitchhiked from Lithuania to Armenia and back again. Outbound via the former Soviet Union and the Caucasus; home via Turkey and the Balkans. Time rich and cash poor, I took risks I wouldn’t today. All the same…  

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In a time of rapid change, companies with the most at risk rely on RMS models, data science, analytics, and software to manage risk and write business with confidence

  • 100% of the top 10 ILS Funds
  • 90% of Bermuda Reinsurers
  • 34 of the top 40 Global Reinsurers
  • 9 of the Top 10 Reinsurance Brokers

RISK TRANSFER ADVISORY

Work with our advisory team to structure efficient risk transfer instruments for the ILS market.

We can help you save money by:

  • Setting effective strategic priorities for protection purchase
  • Designing robust event definitions and triggers that avoid surprises
  • Providing a full and transparent risk analysis using market leading RMS models that help maximise investor uncertainty and minimise price
  • Supporting efficient delivery of modeling data to the market for streamlined execution

OUR SERVICES

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RISK UNDERSTANDING

Our Advisory team has a deep understanding of sponsor and investor needs and goals, developed through decades of experience working with the worlds most sophisticated ILS buyers and sellers

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BOND EXECUTION

Time is money, but efficient execution is more than about doing things on time and on budget. RMS helps issuers clearly communicate risk to the market, while measuring success through investor acceptance and appropriate pricing

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SCIENCE AND MODEL TRANSPARENCY

To be truly innovative, a thorough knowledge of the models and risks they represent is a necessity. Our offerings are based on market-leading RMS science and supported by the largest global network of model specialists.

Comprehensive issuance support

RMS Capital Markets Advisory covers the full transaction lifecycle, from solution design to risk analysis to investor marketing. Our advisory and analytical services include:

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PRE-WORK

Consulting

In-house modeling

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STRUCTURING

Event definition

Trigger design

Process design

EXECUTION

Rating support

Risk Analysis

Documentation

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MARKETING

Investor modeling

Deal modeling

Roadshow

ON-RISK

Pricing service

Portfolio Roll-up

Post event calculation

CLIENT CASE STUDIES

ELEGANTLY SIMPLE PARAMETRIC TRIGGERS

The index used in the MetroCat Re Ltd catastrophe bond is elegant and simple: if a storm surge at the New York battery measures 8.5 feet, the Metropolitan Transit Authority (MTA) receives $200 million. Such simplicity requires a deep understanding of the associated risk.

CATASTROPHE BOND FOR EARTHQUAKE COVERAGE

Bosphorus Ltd. catastrophe bond provides $100 million of catastrophic earthquake coverage. The bond is sponsored by the Turkish Catastrophe Insurance Pool (TCIP), a legal entity responsible for the implementation and management of Compulsory Earthquake Insurance in Turkey.

NEW PARADIGM UNDERWRITERS

New Paradigm Underwriters, NPU, offer innovative supplemental parametric insurance designed to complement existing insurance protection, covering deductibles, over-limit losses and exclusions.

NPU uses RMS modeling and advisory services to structure, quantify and price parametric protection, enabling corporates and insurance companies to purchase cost-effective protection that settles fast. RMS also acts as calculation agent on NPU contracts.

What is Catastrophe Risk?RISK TRANSFER ADVISORY

COMMON QUESTIONS

WHAT ARE INSURANCE LINKED SECURITIES?

Insurance Linked Securities (ILS) are financial instruments whose fundamental value is determined by insurance losses, caused by natural catastrophes such as major earthquakes and hurricanes. As the returns of ILS are primarily driven by natural catastrophes, when carefully structured, they are generally uncorrelated with the overall financial market, making ILS an attractive asset class for capital market investors.

HOW ARE INSURANCE LINKED SECURITIES ISSUED?

To issue an ILS in the security or derivative market, a Special Purpose Vehicle (SPV) is initially issued. This provides the reinsurance for insurance companies and issues securities to investors. The SPV then deposits funds collected by investors into a trust. Any interested parties will pay a premium to the SPV. The amount invested and additional investment income provides the interest payments to investors. Should their not be a catastrophic or trigger event before the maturity date of the contract, investors will receive back their principal investment at maturity on top of the interest payments they have received.

WHAT IS CATASTROPHE RISK?

Catastrophe reinsurance in its simplest form is insurance for those insurance companies who have a portfolio of natural catastrophe business. Reinsuring these risks can help to manage earnings volatility and reduce the amount of capital needs to support exposures.

WHAT ARE CATASTROPHE BONDS?

Cat Bonds are risk-linked securities that transfer a specified set of risks from a sponsor to investors. They emerged from a need by insurance companies to alleviate some of the risk they would face if a major catastrophe event occurred. In short, they are insurance for insurance and reinsurance companies, and are provided by issuing bonds on to investors. Most Cat Bonds are structured to offer insurers the benefit of fully collateralized reinsurance, which significantly mitigates the credit risk an issuer would normally accept from rated counterparties in the reinsurance market. They are generally categorized into 4 basic trigger types.

WHERE CAN I FIND OUT MORE?

Useful links:

www.trading-risk.com
www.insuranceinsider.com
www.insurancelinked.com
www.artemis.bm

or contact us

ILS PORTFOLIO ANALYTICS

As the breadth of instruments available to portfolio managers increases, investors face challenges understanding both risk and return. Instruments can now include risks not modeled by RMS, or any model vendor, and are available with deal data of varying quality, sometimes only exceedance curves.

Now, with increased scrutiny, including internal compliance, regulators and investors, funds are increasingly in need of a whole-portfolio view of their risk, as well as independent marks for private transactions to support net present value calculations.

    how we help

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    REINSURER

    • Evaluate your outward protection buying strategy and consider how ILS might fit in
    • Use RMS ILS products to evaluate ILS investments made or options considered, and understand market pricing
    • Structure and issue effective catastrophe bonds and private deals
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    ESTABLISHED ILS

    • Ensure exceptional deal selection and return analytics 
    • RMS characterizations and underwriting analytics capabilities
    • Monitor risk in real-time as events unfold
    • Monitor tolerances and ensure clear investor risk reporting with portfolio management workflows

     

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    A START-UP FUND

    • Create risk profiles for private ILS deals
    • Provide a single, consistent view of modeling across all private deals
    • Capture all sources of risk, modelled and non-modelled
    • Offer “risk only” or “risk and return” views for underwriting and reporting
    • Support net-present value calculations using weekly marks
    • Offer tailored services for portfolio management and investor reporting
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    AN END INVESTOR

    • Monitor market conditions
    • Roll up multiple fund positions
    • Complete view of portfolio risk including event correlations
    • Analysis of every catastrophe bond and its marginal impact on your portfolio
    • Comprehensive information about each investment
    • Open-access, transparent database format for easy data mining

    “We are now in a stronger position should our area face another large-scale storm-surge event”

    Thomas F. Prendergast, former MTA Chairman and CEO

    ILS PORTFOLIO ANALYTICS

    Common Questions

    Does the solution speak my language?

    The Miu ILS portfolio management platform gives investors comprehensive ILS modeling capabilities to produce the analytics needed for ILS market success. Miu allows you to stress-test portfolios and model even the most complex pay-out and industry loss-based structures.

    Can I analyze the risk of every live catastrophe bond?

    RMS issues a profile for every catastrophe (cat) bond in the marketplace—including excess mortality bonds, and constantly updates Miu for one-click access to risk analysis on every live cat bond available.

    Can I see inside the transactions?

    The Miu open platform gets you inside transactions by extracting the underlying data and then integrating it into your systems, increasing your competitive advantage. With complete transparency into all data,

    Can I house all my risk in the solution?

    Miu can import event losses and exceedance (EP) curves available in deal submissions, for modeled and non-modeled risks, allowing portfolio managers to have a complete portfolio view in one place

    Event response

    RMS knows the growing importance of obtaining and reporting reliable loss information quickly as an event unfolds.

    Reduce the potential for trapped capital and loss creep by assessing the impact of actual events on your individual holdings, your portfolio, or the entire market as they happen.

    HOW WE HELP

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    CAT UPDATES

    Cat Update industry loss estimates provide a basis for clients to assess losses to their own portfolios. Estimates incorporate non-modeled losses, and provide insight into the sources of both modeled and non-modeled loss.

    Cat Update estimates are a range of losses based on hazard parameters, expert judgment, real-time damage reports, and reports from RMS field reconnaissance.

    RELIABLE HURRICANE SURFACE WIND ANALYSIS

    Consisting of instantaneous wind field snapshots and post-landfall wind hazard footprints, gives you the ability to assess and respond to evolving storm conditions as the event unfolds.

    Snapshots allow you to anticipate where claims and business interruption are likely to occur, while footprints help inform accurate positioning of response and recovery assets, as well as post-event performance and loss assessment.

    INTERESTED IN KNOWING MORE?

    CONTACT US NOW!

    Headquarters

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    7575 Gateway Blvd.

    Newark, CA 94560

    Tel: 1.510.505.2500

    Fax: 1.510.505.2501

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    30 Monument Street

    London EC3R 8NB UK

    Tel: 44.20.7444.7600

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    Hoboken, NJ 07030

    Tel: 1.201.912.8600

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