Background on Insurance-Linked Securities
- Insurance-linked securities (or catastrophe bonds) allow for the sponsor’s risk to be sold to capital market investors as securities in return for premium payments.
- ILS and catastrophe bonds should be thought of as a supplement to re/insurance or a replacement for higher levels of cover.
- No reinsurance credit risk.
- Objective risk assessment and speedier payout than traditional re/insurance claims process.
- Highly attractive to investors if the deal is well structured.
- Securities pay out based on defined parameters you can set.
- Investors buy catastrophe bonds for the attractive rate of return and low correlation to other portfolio assets
Why CatVest Petroleum Services LLC for ILS?
- CatVest offers a spectrum of risk transfer insurance-linked securitized solutions to cost effectively manage risk (e.g., Catastrophe Bonds, Industry-Loss Warranties or ILW’s).
- ILS offerings are layered over time to increase coverage, offering strategic coverage decision points to industry.
- Coverage in the hundreds of millions to billions per client (in USD), depending on modeled client risks to be transferred and deal terms for investors.
- Due to market volatility since 2008, HUGE investor interest in ILS, directly offsetting liability coverage costs to industry.
- CatVest ILS strategically constructed for guaranteed coverage to the client and for sound investment assets uncorrelated to the capital markets for the investor.
- Unlike past ILS offerings, CatVest ILS triggers focus on realistic, safe parametric sensitization or industry loss factors:
- For oil spills we integrate spill characteristics:
- Spill source,
- Size and type,
- Location,
- Inventory,
- Vulnerability,
- Hazard
- For broader energy loss covers we integrate:
- Industry loss experience,
- Location,
- Facility specifics,
- Vulnerability,
- Hazard
- Tailored coverage over Oil Pollution Act (U.S.) IMO/IOPC/CLC, EU Environmental Liability Directive requirements.
- Most extensive spill and damage data sets in the world AND world class modeling is used in loss modeling, industry loss index creation and parametric sensitization of long-tail risks.
- Cutting edge, and accepted, energy loss and spill risk assessment technologies ensure accurate risk characterization and management for a fraction of energy loss or spill liability coverage (and transaction) costs.
- Integration of historic loss review and stochastic multivariate modeling ensures that energy loss risks are specific to a given location and comprehensively characterized, providing excellent and realistic analyses of actual energy risks.