Alternative Risk Transfer and Insurance-Linked Securitisation

Alternative Risk Transfer and Insurance-Linked Securitisation
Order Description
PART ONE – Catastrophe bonds and non-proportional re/insurance
Select TWO cat bonds that have been issued within the last 12 months – ONE with an indemnity trigger, and ONE with a non-indemnity trigger.

A. Outline the key details of your chosen two Cat bonds; (2 x 7.5 = 15 marks)

B. Analysis carefully the principal features that make Cat bonds ‘alternative’ (i.e. in comparison to the nearest more traditional re/insurance product), illustrating your points with details from your two chosen cat bonds; (20 marks)

C. Evaluate the advantages and disadvantages of each of your chosen Cat bonds from the perspective of the issuer; (20 marks)

D. Evaluate the advantages and disadvantages of each of your chosen Cat bonds from the perspective of the investors. (10 marks)

PART TWO – Contingent capital, sidecars and proportional reinsurance

A. Outline the key details of an actual contingent capital transaction placed for an insurance company in the last 5 years; (5 marks)

B. Outline the key details of an actual sidecar transaction placed for an insurance company in the last 5 years; (5 marks)

C. Compare and contrast the features of your chosen contingent capital and sidecar transactions, with each other, and with a traditional proportional reinsurance policy. (10 marks)

PART THREE – The future of ILS Alternative capital to continue disruption of reinsurance: Nelson, Lloyd’s (artemis, 13 May 2016)

The talk over the last 20 years since the emergence of ILS in the mid-1990s has been of the ‘convergence’ of ILS and traditional reinsurance. John Nelson (Chairman of Lloyd’s) above has now spoken of ‘disruption’. Do you consider that ILS & reinsurance have now converged? In what ways has ILS disrupted reinsurance? What do you think are the key factors that will influence the future evolution and development of ILS? (15 marks)
Length guideline: between 1,500 to 2,500 words, but no penalties for exceeding this length (as long as material is all relevant).