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Archive Stories
Archived stories from 2011

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CEOs confused by cat bonds

The boom in Insurance Linked Securities (ILS) has been welcomed by most in the re/insurance sector, but some are still a little confused by the financial instruments. "I just don't get them," said Sir Norbert "Nobby" Johnson, Mocha Re's chief executive and chairman. "I mean, what do they do? Why are they financial instruments? Can you play a tune on them? Oh, hang on, I get it, financial instrument, playing the markets, what ho! That explains all that stuff about notes. Very clever. Still don't understand fully. How does bonding a cat help us? Apparently the latest thing is a JLS, at least, so my 13 year old daughter tells me."

Cat bonds - it's not rocket science, it's just gambling

Ian Luddite, chief executive of the Luddite Agency, is another insurance leader who is confused by the involvement of the capital markets. "What the hell have Billingsgate, Leadenhall and Spitalfields got to do with reinsurance protection. We believe in moving with the times, and that is why we at Luddite are pleased to announce that we will for the first time be taking advantage of a new form of reinsurance protection known as retrocession. It might sound like we are doing something retro but actually we're being very modern," he hilariously quipped.

2011 has already seen a handful of securitisation deals, including Gollum Re's three week cat bond issuance through Florida-based Bieber Re, which has two trenches, comprising ?23.50 of Series 2011 - 47648, Class ABCDE Principal-at-Risk Variable Rate Notes, and some other really complicated notes which are also pretty variable, due to mature when it has its first shave and its balls drop. The issuancenance provides collateralisable retrocessionalised cover against non-payment of cat bond risks. Three notes have been rated as "not bad" by rating agency Grumpy Glitch Wurst & Rich's.




Other news from Apr 2011
Travelating the Wave of Insurability
the serious stuff
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