ILS Intelligence


CAT BONDS RESIST RECORD TORNADO ACTIVITY


ILS Indices, during the fourth quarter of the year all four categories posted gains: the All Bond and BB-Rated Bond indices increased by 1.58 percent and 1.71 percent, respectively, while the US Hurricane Bond and US Earthquake Bond indices increased by 1.68 percent and 0.73 percent. While the indices were all slightly lower compared with the same quarter in 2010 due to mark-to-market losses, the performance of ILS remained strong in the context of the severe global catastrophe losses, which had a significant negative impact on the profitability of insurers and reinsurers.


D According to Aon Benfield’s Impact Forecasting team, global natural disaster


activity in 2011 comprised 253 separate events which, in aggregate, gave rise to an economic loss of $435 billion and an insured loss of $107 billion. In terms of economic losses, 2011 was the costliest natural disaster year on record; for insured losses, it was second only to the $120 billion of losses experienced in 2005, caused mainly by the hurricanes Katrina, Rita and Wilma.


espite a year of heavy catastrophe losses for the re/insurance industry, the investment case for insurance-linked securities (ILS) remained robust during 2011. According to Aon Benfield’s


WELLS FARGO BOOSTS INSURANCE TRUST TEAM


W


ells Fargo has announced three promotions in its insurance trust operations. Robert Quinn has been promoted to senior vice-president responsible for global sales of the Wells Fargo


insurance, reinsurance, insurance-linked securities, and captive trust product offerings.


Todd Winchel, previously vice-president and product manager for the


Wells Fargo Insurance Trust, has been promoted to senior vice-president and regional manager of the Wells Fargo National Products team, of which the Insurance Trust is part.


Robert Bilodeau, previously senior relationship manger, has been


promoted to product manager to replace Winchel. Quinn said: “These moves, particularly with regard to Todd Winchel


and Robert Bilodeau, will further streamline our insurance trust product offering by empowering the very people who built this product from the ground up (and who contain the street level expertise) to make broader- reaching decisions while keeping them close to the business.”


WELLS FARGO INSURANCE TRUST TEAM NAMED ‘GLOBAL BEST BANK FOR INSURANCE TRUSTS’


O


ver the past 10 years, the Wells Fargo ILS and Reinsurance Trust group has established billions of dollars of trusts used to


collateralise ILS, reinsurance, and captive programmes worldwide. The cost savings realised by our clients using the WF Trust in lieu of letters of credit (LOCs) are staggering.


There are many benefits to using the WF Trust in lieu of LOCs to


collateralise such programmes. They include: • Saving between 80 percent and 98 percent of LOC fees • Keeping corporate credit lines available • Retention of the interest income of assets held in trust • Retention of ownership of the assets in trust • Ease of set-up and renewal. The trust concept is simple. Rather than posting a letter of credit as


collateral, our clients deposit cash or cash equivalents (the same cash that they would likely use to collateralise an LOC) into a legal trust account where the depositor “owns” the money and the transformer


(for ILS deals) or cedent (for reinsurance) is the beneficiary of the trust. From a regulatory and carrier perspective, this satisfies the collateral requirement. The Wells Fargo ILS and Reinsurance Trust team has the well


deserved reputation as the most knowledgeable and responsive trust group in the industry. So if you are posting LOCs for ILS, reinsurance, or captive programmes, or if you are finding your current trustee less than ideal, consider using the ILS or Reinsurance Trust, and please consider Wells Fargo as trustee.


For more information please contact Robert Quinn on: Tel: +1 203-293-4394 Email: robert.g.quinn@wellsfargo.com Website: www.wellsfargo.com/insurancetrust


46 | INTELLIGENT INSURER | Spring 2012


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