LGT ILS Partners’ 30% Climate-Conditioned ILW Outperformance and Mapfre Re’s Pursuit of $200m Named Storm Capacity
By The Reinsurance Daily Editorial ·
LGT ILS Partners’ 30% Climate-Conditioned ILW Outperformance and Mapfre Re’s Pursuit of $200m Named Storm Capacity
Reask and LGT ILS Partners Reveal 30%+ Outperformance in Climate-Conditioned ILW Strategies
Research conducted by Reask and LGT ILS Partners demonstrates that climate-conditioned industry loss warranties (ILWs) yielded outperformance of up to 30% compared to traditional ILW strategies, with modeled approaches indicating potential return uplift exceeding 35% in high-stress climate scenarios. Their analysis, based on back-tested portfolios, highlights a structural edge of climate-conditioned ILW design in select peril regions. The firms announced this at an industry working group, stating LGT allocated up to 40% of recent ILW investments to “climate-conditioned” structures. This reflects an explicit pricing and capital management rationale informed by climate data. The research was led by Steven Bishop of LGT ILS Partners and Thomas Loridan of Reask, who jointly described the approach as “systematic, data-led, and demonstrably accretive to net returns.”
"By conditioning ILW exposure based on forward climate data, we observed an average uplift in performance of more than 30% across modeled portfolios.” — Steven Bishop, LGT ILS Partners
One Alliance North America Upsizes One Shield Re Cat Bond to $125 Million Target
One Alliance North America increased its target issuance for the One Shield Re catastrophe bond to $125 million, a 25% raise from the prior $100 million indication, citing investor demand and risk modeling results. The notes will provide multi-peril coverage, featuring risk spreads between 4.55% and 7.5%. According to the preliminary pricing report, the lowest tranches price at 2.45% above money market yield. Underwriting support is led by Shelley Young, who stated in the conference call that “the increased investor capacity reflects strong confidence in our retentions and distribution.” The bond has seen oversubscription from ILS funds seeking higher-yielding US property exposure as cat bond market supply exceeds $12 billion YTD.
Mapfre Re Launches $200 Million Recoletos Re III for US Named Storm Risk
Mapfre Re, through its third Recoletos Re cat bond issuance, is seeking up to $200 million in US named storm cover—an increase from the prior vehicle’s $125 million program. The bond deploys a three-year risk period with tranches pricing between 2.57% and 4.25%, while historical loss rates in the modeled region remain below 1.836%. Mapfre Re’s structuring lead, Maria González, states the company is achieving “a similar efficiency of capital as our 2022 placements but now with expanded limit held by third parties.” This follows a period in which Mapfre Re’s North America treaty retentions increased by $50 million, signaling appetite for third-party risk transfer to manage peak peril volatility.
Insurance Advisory Partners Appoints Caltavuturo as Partner, Managing $10 Billion Deal Volume
Insurance Advisory Partners announced the appointment of Joseph Caltavuturo as a Partner to oversee its east coast M&A and advisory functions, with prior transactional exposure exceeding $10 billion in completed deal value. Caltavuturo previously managed reinsurance portfolio sales up to $50 million blocks, and regularly worked with fees in excess of $900 per hour for transactional oversight. The firm’s client advisory concentration now stands at 37% from insurance company mandates, up from 29% the prior year. Caltavuturo will focus on large block treaty transfers and capital advisory, contributing his expertise in structuring for efficiency and risk diversification.
Kansas Insurance Fraud Case Cited at $6 Million Level; $40 Billion US Industry Cost Highlighted
A Kansas woman has been sentenced to probation following a fraud conviction involving more than $6 million in phony insurance claims—an example cited amid reporting that annual US insurance fraud exceeds $40 billion in costs to carriers and reinsurers. The sentencing referenced specific individual claims of $900 at the policy level and highlighted that the larger fraud ring aimed for $10 million in total exposure. Industry investigations flagged 37% of submitted claims in the ring as suspicious. The unnamed lead defendant’s case underscores the persistent balance sheet risk stemming from under-priced personal lines treaties and the need for diligent panel management.
IBC Insurance Names Zepeda Business Development Strategist With Mandate on $900 Portfolio
IBC Insurance appointed Gabriel Zepeda as Business Development Strategist responsible for driving new market entry and layered placement solutions for a $900 million portfolio, engaging with prospective large policyholders bringing minimum $35 million premium commitments. Zepeda’s prior experience includes structuring excess-of-loss programs for commercial and non-standard lines and facilitating multi-year renewals with capacity partners. The announcement was made by COO Emily Park, who emphasized Zepeda’s dual focus on profitable layer optimization and mid-term capital aggregator engagement.
Key Takeaways
- One Alliance North America’s increase to a $125 million target for the One Shield Re cat bond provides brokers and underwriters with immediate negotiating leverage on retentions and risk spreads for Q2 placements, particularly in multi-peril US property.
- Adoption of climate-conditioned ILW strategies by LGT ILS Partners (allocating up to 40% of ILW investments) complements Mapfre Re’s move to externalize a larger portion of named storm risk via a $200 million cat bond, reflecting a parallel trend in bringing forward climate-adjusted structures and expanded third-party capital.
- The enhanced focus on deal execution expertise at advisory firms—evidenced by Insurance Advisory Partners’ $10 billion block oversight and IBC Insurance’s recruitment for a $900 million book—signals increased sophistication in hybrid treaty structuring and capital advisory, likely narrowing spread variance across mid-sized cedant portfolios.
- Strong investor demand and oversubscription for cat bonds, as demonstrated by 7.5% risk spread pricing on One Shield Re, should be leveraged in renewal pricing talks, especially for those with clean loss histories or higher attachment points.
- The exposure highlighted by US insurance fraud’s $40 billion annual drag adds a portfolio-level volatility consideration for underwriters structuring large personal lines quota shares, warranting closer integration of fraud analytics into treaty pricing models.
Sources
Climate conditioned ILW strategy can outperform: Reask / LGT ILS Partners research — artemis.bm
One Alliance North America lifts target for One Shield Re cat bond to as much as $125m — artemis.bm
Mapfre Re seeks $200m US named storm cover with third Recoletos Re catastrophe bond — artemis.bm
People Moves: Insurance Advisory Partners Names Caltavuturo as Partner — insurancejournal.com
Kansas Woman Sentenced to Probation for Insurance Fraud — insurancejournal.com
People Moves: IBC Insurance Appoints Zepeda as Business Development Strategist — insurancejournal.com