Articles from June 2025

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Florida’s Citizens Property Insurance Corporation has leaned more heavily on the catastrophe bond market for its 2025 risk transfer strategy, with CFO Jennifer Montero revealing that 70% of the insurer’s total risk transfer program, including both new and continuing coverage, is now backed by cat bonds.

Speaking during Artemis’ recent Catastrophe Bond and ILS Market Conditions at Mid-Year 2025 webinar, Montero shared insights into Citizens’ renewal strategy this year and the company’s evolving and growing engagement with the insurance-linked securities (ILS) market.

“Heading into June 1st for the renewals, our strategy was to go out early and take advantage of the positive momentum in the market. We continue to hear from market participants that losses from the 2024 hurricanes, as well, as the 2025 wildfires were manageable for the risk transfer market. In addition, there is tangible improvement in the Florida market, as a result of the reforms that passed in 2022,” Montero explained.

These favourable dynamics led to strong engagement with investors during Citizens’ roadshow, setting the stage for its landmark catastrophe bond issuance.

In early May, Citizens Property Insurance Corporation successfully priced, what at the time, became the largest catastrophe bond issuance ever seen, securing a 56% upsized $1.525 billion of reinsurance from its new Everglades Re II Ltd. (Series 2025-1) issuance.

“This year, our initial price guidance for the Everglades transaction was $975 million with room to upsize if the market conditions were favourable. The investor appetite and the pricing in the capital markets was very positive, which is why we ended up upsizing Everglades by 56% to $1.525 billion,” Montero noted.

Later in the webinar, Montero elaborated on Citizens’ broader strategy and the increasing role of ILS in its risk transfer program.

“In our meetings with investors in both the capital markets and the traditional markets, the takeaway was that there’s ample capacity and cost-efficient price levels in both markets. But there were more advantageous conditions in the ILS market this year, which is why we ended up placing more than 52% percent of the $2.9 billion of new risk transfer coverage in the capital markets,” she explained.

With an additional $1.6 billion in outstanding cat bonds from 2023 and 2024, Citizens’ total catastrophe bond-backed coverage rose to 70% of its overall program this year, a significant shift from prior years.

“Historically, in the cat bond market, we have not had that large of a portion of our program. But considering that this year, the cat bond market was such a better program and it provided the aggregate, multi-year, better pricing, flexible resets etc. We felt that we benefited from being able to secure the multi-year coverage at the higher levels. Typically, cat bonds are less than 50% of our overall program and this year they’re 70%,” Montero added.

Recall that, for 2025, Florida Citizens had a target to secure $4.49 billion of total risk transfer, across cat bonds and reinsurance, with $2.89 billion of new reinsurance and/or cat bonds required, alongside the still in-force deals from prior years.

Furthermore, Montero also underscored the value of collateralized structures, which she sees as offering added security in the event of major catastrophes.

“As far as collateral markets go, of course all the ILS is collateralized. But on the traditional side, we only have a handful, three or four carriers, reinsurers, that are collateral markets. However, their placement makes up 25% of the total traditional coverage that we have.

“I prefer the collateralized coverage if that’s what we can get. You know it’s there. You don’t have a problem if a great big storm hits, you don’t have to worry about whether or not reinsurers can pay out to all their cedants.

“So, collateralized is always something that we like. But again, we only have about three or four of our 2025 participants that are actually collateralized, but they do make up one-fourth of the whole traditional program,” Montero concluded.

If you didn’t register for the webinar first time around, you can still watch the full video replay by signing up here.

Advantageous ILS market conditions see cat bonds at 70% of Citizens program: CFO Montero was published by: www.Artemis.bm
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Descartes Underwriting, the parametric risk transfer specialist, has secured a strategic investment from Battery Ventures, a global technology-focused global investment firm.

The transaction was executed at a premium to Descartes’ most recent Series B valuation. It allows Battery to join the organisation’s shareholder base, while all existing investors retain a substantial  majority of their holdings.

As part of the transaction, Marcus Ryu, Partner at Battery Ventures and former Chief Executive Officer (CEO) and co-founder of Guidewire Software will join Descartes as a board observer.

Tanguy Touffut, CEO and co-founder of Descartes, said: “Over the past six years, Descartes has established itself as the leading parametric insurance business for climate-related risks, remaining true to our scientific approach to risk transfer.

“As we scale globally to address the widening protection gap around natural disasters, we’re thrilled to welcome Marcus — one of the world’s most accomplished Insurtech entrepreneurs — whose experience and vision will be invaluable as we execute our ambitious roadmap.”

Adding: “Battery’s investment is a major endorsement of our mission and a strong signal of our commitment to the North American market, already our largest market.”

Ryu, also commented: “Over twenty years of serving the global P&C insurance industry informs my keen interest in applying technology to address the enormous underinsurance gap.

“Parametric insurance is one of — if not the — most promising approaches to transfer risk efficiently, and like many industry participants I believe it will continue to grow in importance and adoption.”

Ryu continued: “The team at Descartes Underwriting is uniquely credentialed in this domain, and I am very impressed with the market and thought leadership position they have built with brokers, capacity partners and insureds in a short period.”

Parametric specialist Descartes secures investment from Battery Ventures was published by: www.Artemis.bm
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Kin Insurance has increased the size of its Florida reinsurance tower by 40% at the mid-year renewals, securing $1.4 billion of limits for that state, while its reinsurance coverage for other states (ex-CA) it operates in grew even more to surpass $250 million in limits.

Insurtech underwriting company Kin Insurance has been growing through the expanding operations of its Kin Interinsurance Network and Kin Interinsurance Nexus Exchange, the two reciprocal exchanges it manages.

Earlier this year, Kin secured its largest catastrophe bond yet, with the $300 million Hestia Re Ltd. (Series 2025-1) transaction now a core component of its Florida-focused hurricane reinsurance protection for the coming season and it will remain in-force for the next two seasons after that as well.

In addition to that, Kin also has $100 million of reinsurance still in-force from its Hestia Re Ltd. (Series 2023-1), so giving the company $400 million of cat bond risk capital outstanding at this time all of which sits in the Florida reinsurance tower providing named storm protection.

Kin said that in securing the rest of its reinsurance arrangements for the next year, they reflect its “unwavering commitment to robust risk management and financial stability as it continues its rapid market expansion.”

The company also said that the reinsurance renewal was “secured at favorable economic terms.”

All of its reinsurance coverage levels significantly exceed the relevant regulatory requirements, Kin explained.

The $1.4 billion of renewed Florida catastrophe reinsurance is a 40% uplift from Kin’s 2024 program, which provided the company $1 billion of limits.

For other states, but excluding California, Kin now cites over $250 million of catastrophe reinsurance protection, so at least a 79% increase on the $140 million from the prior year.

However, the company still has coverage in California, but just does not cite an amount, saying, this provides additional “targeted protection against severe seismic events and wildfires, ensuring robust financial backing for policyholders in this high-risk region.”

Kin Chief Insurance Officer, Angel Conlin, explained, “We are incredibly pleased to have successfully completed our annual reinsurance placement with such strong support from our long-standing partners. This consistent backing is a testament to the effectiveness of our data-driven underwriting, and our proven ability to handle claims responsively, especially in the face of evolving climate risks. It further validates our unique approach to managing catastrophe exposure and reinforces our financial strength.”

The 2025 reinsurance renewal saw Kin transacting with a panel of 44 reinsurers, each A- rated or higher by AM Best or 100% collateralized, while the insurer is also now supported by 29 catastrophe bond investors.

Kin said this broad access to reinsurance capital reflects, “deep confidence in Kin’s underwriting capabilities.”

As we reported back in April, the vast majority of principal from Kin’s $175 million Hestia Re Ltd. (Series 2022-1) catastrophe bond that had been threatened by loss activity is now expected to be returned to investors at the upcoming risk period end, while just $5 million will be retained with an extended maturity date.

Read all of our reinsurance renewal news coverage.

Kin renews 40% more Florida reinsurance at $1.4bn. Other states tower (ex-CA) now $250m+ was published by: www.Artemis.bm
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Siena Capital Group, LLC has announced that it has appointed Ridwan Bari as its Chief Technology Officer (CTO), to spearhead technology strategy across the firm’s portfolio companies and lead the development of Caterina, the Group’s insurance-linked securities platform.

Founded in April 2025 by Luke Meehan (Managing General Partner) and Jack Stone (Partner), Siena Capital Group operates as a private investment office with a focus on special situations.

Bari brings over two decades of experience in financial services technology to the firm. Most recently, he served as Global Head of Fixed Income, Derivatives, and Multi-Asset Technology at S&P Dow Jones Indices, where he led cloud-native platform development and technology transformation initiatives supporting more than $1 trillion in client AUM tracking S&P benchmarks.

As CTO, Bari will oversee engineering teams collaborating closely with Siena Capital’s specialists in research, catastrophe modeling, and ILS portfolio management. Together, they aim to build the Caterina platform from first principles, leveraging deep domain expertise to address real-market inefficiencies in the ILS market.

“I’ve always gravitated toward understanding clients’ needs, with a deep desire to learn what ‘value’ means from the customer’s perspective and how we can leverage technology to deliver that value,” commented Bari.

“Ridwan’s expertise in building enterprise-grade fixed-income, derivatives, and multi-asset products, combined with our key hires in ILS analytics and portfolio management, positions us to deliver scalable solutions to our clients,” said Jack Stone, CEO of Caterina and Partner at Siena Capital Group.

He added: “To our knowledge, there isn’t anyone of Ridwan’s caliber from traditional finance who has such a specialized focus on the insurance-linked securities market at the moment. His expertise positions us to deliver solutions that will fundamentally change how this industry operates.”

“Ridwan’s appointment demonstrates Siena’s commitment to hiring first-rate talent to create a positive impact in the industries that we choose to serve,” added Luke Meehan, Managing General Partner of Siena Capital Group.

“Being closer to top-class talent puts us in a great position to recruit from the best educational institutions in the world as we expand aggressively. I’m really excited about this opportunity and look forward to leveraging technology to bring about innovation and efficiency in the ILS ecosystem. Our goal is to build services and infrastructure that will fundamentally enhance transparency and create value for the end investors,” Bari further added.

Bari’s appointment follows a recent European roadshow, during which leading ILS managers expressed strong interest in the Caterina platform and its potential to meet pressing market needs.

Artemis previously spoke with Jack Stone to gain a deeper understanding of the company’s plans and what the catastrophe bond market can expect from Siena Capital as it develops its pricing technology and ILS platform.

Siena Capital Group hires Ridwan Bari as Chief Technology Officer was published by: www.Artemis.bm
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As investors grapple with the challenges of market concentration, rate uncertainty, and sustainability underperformance, insurance-linked securities (ILS) are emerging as a compelling solution for ESG-focused portfolios, according to Tiziana Maida, Head of Research at investment management, wealth planning and consulting specialist IPS Capital LLP.

In a recent commentary, Maida outlined how IPS Capital incorporated ILS into its ESG portfolios in the fourth quarter of 2024, highlighting the asset class’s diversification benefits and alignment with environmental and social goals.

“With this scenario in mind, we have focused on alternative investments that are not exposed to the risk of higher rates for longer, such as insurance-linked securities which we have added to ESG portfolio in Q4 last year,” she said.

“By their nature, ILS align well with our commitment to environmental, social, and governance principles as they play a crucial role in addressing climate change-related events,” Maida explained.

Maida also pointed out that beyond financial returns, ILS contribute to real-world resilience.

“ILS help insurers and reinsurers manage these growing risks. By investing in these products, we can then support the insurance industry’s ability to provide coverage for climate-related events, enhancing social resilience and providing financial support for rebuilding efforts after natural disasters,” she added.

The short duration of ILS, which is typically up to one year, makes them particularly adaptable to climate risk, as they can reprice annually to reflect changing environmental conditions.

As Maida goes on to note, this provides investors with updated compensation for emerging climate exposures.

In addition, Maida also highlighted the asset class’s growing recognition within the sustainable finance framework.

“A significant portion of ILS assets are now classified as Article 8 under the European Union Sustainable Finance Disclosure Regulation (SFDR), highlighting their sustainability focus,” she explained.

Adding: “Moreover, ILS are increasingly being used with a development angle, such as bonds issued to protect against earthquake risk in developing countries. This approach allows investors to support disaster risk financing in developing nations, aligning with sustainable development goals.”

She continued: “The financial benefits of these products also offer a compelling narrative. They often offer favorable terms compared to corporate bonds of similar credit quality. ILS are trading on an average spread of 8.8% over the risk free and they display a current average expected credit loss of just over 2% which compares favorably to the 3.2% credit loss for global high yield bonds as reported by the credit rating agency Moody’s.”

Amid growing market volatility, climate risks, and pressure on ESG strategies to deliver, Maida views ILS as a unique asset class that combines strong return potential with risk resilience and measurable impact.

“By incorporating ILS into our investment strategy, we are not only potentially enhancing returns and diversification but also contributing to a more resilient and sustainable global economy,” Maida concludes.

Furthermore, IPS Capital’s Chief Investment Officer Chris Brown recently noted that, “Our insurance linked securities are unaffected by tariff noise (which is of course one of their core attractions) and are also up for the month and year so far.”

ILS gain ground as ESG diversification tool: IPS Capital’s Maida was published by: www.Artemis.bm
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With property catastrophe reinsurance pricing having now softened from its recent hard market highs, there is an expectation that ceding companies and buyers will look to take the opportunity to secure more protection lower down in the working layers of their reinsurance towers, analysts at Jefferies have stated.

While commentary from management teams continues to highlight pricing as adequate across the property catastrophe reinsurance industry tower, with top-layers softening the most the analysts are becoming more cautious on the outlook for companies that tend not to venture into the working layers.

Working layer and aggregate reinsurance protection has been harder to source and much more expensive in recent years, through the peak of the hard market, but now conditions are more accommodating and buyers are having more success at bringing capital to support their needs at lower levels of attachment or more frequent return-periods, it seems.

Commentary from the June renewals suggested Florida players were able to buy more protection around and below the Florida Hurricane Catastrophe Fund layer of their towers, while we’ve also reported on a number of new and in some cases large aggregate arrangements that have come to market.

Explaining the backdrop, Jefferies analysts stated, “Recent reinsurance broker reports point to pricing being pressured given increased capacity in the marketplace which more than offset any incremental demand purchased from cedants.

“Newly formed reinsurers/syndicates/ILS funds along with increased carrier retained earnings led to capital supply outpacing rising demand.”

Leading them to say that, “At June 2025 and into January 2026 we expect insureds to try to increase reinsurance purchasing on more working layers portions of programs.”

For those companies that do not participate as much in the lower or more working layers of reinsurance towers, this is seen as potentially detrimental. As despite the fact continued premium expansion may be available in the upper-layers it is no longer going to be at the rates experienced over the last two years, the analysis suggests.

Ceding companies have had “leverage over capital providers” so far in 2025, given the availability of capital and its appetite for risk has increased sufficiently to benefit the cedents through pricing.

What’s important to note though is that compensation per-unit of risk still remains high, given terms and conditions have not meaningfully changed, while attachments remain at or very close to their hardest market levels.

It’s natural that as the more remote-risk layers of reinsurance towers see pricing soften off their highs, the focus of buyers shifts to trying to get a more accommodating response from capital providers in their working layers as well.

Some capital providers will naturally look to venture a little lower as well, to augment portfolio returns and reduce their weighting to the more-competitive top-layers, all of which can make for a buying opportunity.

Of course, we’ve seen this all before through previous reinsurance cycles.

The market has had a tendency in the past to look for growth as the cycle moves down, which can ultimately exacerbate any softening. We saw this in the 2010’s when some major reinsurers were continuing to grow into US property cat risk premiums, while at the same time becoming very vocal about the threat posed by alternative capital.

We’d like to think things might be different after the hard (soft) lessons learned this time around, but we’re still a way off that stage of the cycle this time and will have to wait for 2026 and beyond to see how market dynamics and risk appetites evolve.

Read all of our reinsurance renewal news coverage.

Increased reinsurance purchasing anticipated in working layers of towers: Jefferies was published by: www.Artemis.bm
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In its New York lawsuit against China Construction Bank (CCB) over the Vesttoo fraud, Aon’s segregated accounts company White Rock Insurance (SAC) Ltd. has raised the recent emergence of a criminal bribery case in Hong Kong and suggests this means CCB must have relevant communications and documentation that would support its own claims.

Aon’s White Rock entity filed a lawsuit in New York against China Construction Bank back in August 2024.

That lawsuit alleges that an “inside man” at the bank had represented that letters of credit (LOC) involved in the Vesttoo fraud, linked to reinsurance deals facilitated via White Rock, were authentic.

As a result of which, White Rock claimed a minimum $140 million in damages from the bank, for the losses suffered by the company and its clients.

Aon has been pursuing China Construction Bank in the courts ever since, with the bank denying its claims and calling for the case to be dismissed.

One of its requests of the court has been to gain access to relevant documentation regarding the Vesttoo linked reinsurance deals.

But now, seemingly in light of the emergence of the first potential criminal case related to the Vesttoo reinsurance letter of credit (LOC) fraud, Aon’s White Rock has raised the existence of that case as supporting evidence CCB must have communications and documentation of relevance to its own lawsuit against the bank.

Recall that, the Hong Kong bribery case that began last week accuses a former China Construction Bank employee of accepting payments in a crypto currency amounting to US $470,000 from a Vesttoo employee, to authenticate false letters of credit and collateral documentation.

The former CCB manager that features in the bribery case brought by the Independent Commission Against Corruption (ICAC) of the Hong Kong Special Administrative Region, Chun-Yin Lam, is the very same that was highlighted in the original filing of the Aon White Rock lawsuit in New York.

As Aon had called that person a key “inside man” in the fraud, evidence that staff working at CCB had helped facilitate the use of fraudulent letters of credit (LOC) to back Vesttoo’s reinsurance deals, it’s no surprise the company has now raised this fact.

In opposition to a motion that defendant China Construction Bank filed to dismiss White Rock’s amended complaint in the New York case, a new filing from the plaintiff states that it believes facts may exist that warrant jurisdictional discovery.

The filing on behalf of Aon’s White Rock states that it is believed CCB may have the emails and communications of Chun-Yin Lam, the employee accused of bribery, as well as documents, documentation and meeting details related to the Vesttoo fraud-linked LOC’s and transactions.

White Rock’s filing highlights that CCB is reported to have cooperated with the Hong Kong Independent Commission in its bribery case, suggesting it may have evidence related to the named former employee’s interactions with Vesttoo staff at the time.

“Such documents and communications would evidence that, in taking the actions giving rise to White Rock’s claims, Lam acted on behalf of CCBA with actual or apparent authority and his actions are thus attributed to CCBA for personal jurisdiction purposes,” the filing states.

White Rock’s filing to the NY case also states that , “Accordingly, there is reason to believe that CCBA and the other Defendants are in possession of facts from Lam’s criminal proceeding and investigation, including the decision to charge Lam as CCBA’s agent, documents and communications that CCBA provided to prosecutors in advance of that decision, and facts regarding Lam’s dealings that were revealed as part of the criminal investigation. These and similar facts are relevant to the Court’s personal jurisdiction over CCBA, including based on Lam’s acts as CCBA’s agent.”

White Rock states that it does not have access to additional jurisdictional facts, including those that may underpin the bribery case in Hong Kong, and also believes that these facts could support its original claims against CCB.

As a result, Aon’s White Rock believes jurisdictional discovery is warranted.

Commenting on the CCB motion to dismiss the NY case, White Rock’s memorandum states, “Strikingly absent from CCBA’s Motion is any indication of accountability for the havoc it wreaked on the international insurance market. For two years, a CCBA banker, Chun-Yin Lam, deployed the authority CCBA bestowed upon him to issue billions of dollars’ worth of LOCs as purported collateral for global reinsurance facilities. Lam used his official title and CCBA’s name, email domain, offices, telephones, seals, and letterhead for massive public transactions on a daily basis, yet CCBA claims ignorance.”

As a reminder, there are other insurance and reinsurance market entities that have launched lawsuits against China Construction Bank in relation to the Vesttoo fraud saga.

Porch Group’s Homeowners of America Insurance Company (HOA) had first filed a law suit in New York against China Construction Bank Corporation over the Vesttoo reinsurance collateral fraud, while program services and fronting specialist Incline P&C Group also had an open lawsuit against China Construction Bank in the same district court.

Those lawsuits have been consolidated under a single case now. While there hasn’t been any update to it since April, it’s possible the bribery case could also result in further arguments being made.

More recently, fronting specialist Clear Blue Insurance also sued China Construction Bank for damages, another case that persists but with little progress made so far.

It now stands to reason these other cases will also see this new criminal bribery case in Hong Kong raised. Defendants will likely see it as evidence CCB may have more information of importance to their cases, like Aon seems to. But whether it makes a difference remains to be seen, given the challenges in suing a partially state-owned entity.

Read all of our coverage of the alleged fraudulent or forged letter-of-credit (LOC) collateral linked to Vesttoo deals.

Aon’s White Rock spotlights HK bribery case in Vesttoo-lawsuit against China Construction Bank was published by: www.Artemis.bm
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Reinsurance and retrocession capacity for Florida surged at the June–July 2025 renewals, supported by strong investor appetite in the insurance-linked securities (ILS) space and growing confidence in the state’s reformed legal environment, according to Fitch Ratings.

In a recent report released by Fitch Ratings, analysts noted that the rise in capacity, both from traditional reinsurers and non-traditional sources including record-setting catastrophe bond issuance, comes amid sustained demand from Florida property insurers following a highly active 2024 hurricane season.

Notably, both hurricanes Milton and Helene made landfall in Florida within a two-week span during last year’s very active season, adding urgency to midyear placements.

Fitch reports that while reinsurers had hoped for a hardening market in light of significant catastrophe losses so far in 2025, notably California wildfires, rates softened modestly, particularly for loss-free business, which saw reductions of 10% or more.

Pricing for loss-impacted business was flat to slightly up. However, terms and conditions largely held firm, with retentions steady at levels that protect capital rather than earnings.

“Reinsurance and retrocession capacity to the Florida market are increasing from both traditional and ILS sources, including record issuances of catastrophe bonds. This increased supply reflects catastrophe risk returns that remain strong, although somewhat reduced from the market reset in pricing and terms and conditions experienced in 2023, post-Hurricane Ian,” Fitch said.

Readers may recall, that catastrophe bond issuance reached a record-breaking $5.9 billion in May alone, helping drive total issuance past $15 billion for the year so far, a 15% increase year-on-year and the strongest performance on record.

Meanwhile, Fitch also pointed out that capacity is primarily being deployed at higher catastrophe layers, as reinsurers remain cautious of providing coverage at lower layers, where elevated property losses persist.

“Fitch expects the reinsurance market to maintain its discipline and continue to support strong risk-adjusted returns as catastrophe risk remains high amid climate change concerns.”

Peel Hunt analysts recently highlighted that internal rates of return (IRRs) in property catastrophe reinsurance remain “very attractive.”

Beyond hurricane activity, Fitch attributed the surge in demand to structural shifts in the Florida insurance market. The Florida Hurricane Catastrophe Fund (FHCF) raised its retention by $2 billion to $11.3 billion.

Additionally, several new insurer entrants and increased policy take-outs from Citizens Property Insurance Corporation, which typically relies less on private reinsurance, have boosted demand. Takeout companies, in contrast, tend to purchase more private protection.

While the capital strength of some Florida-focused insurers remains weaker than that of national peers, the broader industry capital base remains sufficient to absorb significant hurricane losses in 2025. However, Fitch cautioned that individual Florida specialists could face challenges if the region sees another severe catastrophe season.

Furthermore, Fitch also acknowledged the stabilising effect of litigation reforms introduced in Florida since 2019.

These include the removal of one-way attorney fees, restrictions on assignment of benefits, and limitations on bad faith claims. While the reforms have not yet triggered a major return of capacity from highly rated global insurers, Fitch notes that initial signs suggest a positive impact on loss costs and litigation activity.

It’s also worth noting that the renewed interest from ILS investors, and the record catastrophe bond issuance, has been driven by several interlinked factors.

These include attractive pricing and solid returns, even if slightly below the peak levels seen in 2023; stronger terms and higher attachment points following the 2023 market reset, which have made cat bonds and collateralized reinsurance more appealing to investors seeking protection from frequent small losses; and, as previously mentioned, a reformed legal and regulatory environment in Florida that has significantly improved market confidence.

Meanwhile, AM Best reported that Florida’s specialist personal property insurers entered the key 2025 mid-year reinsurance renewals from a position of relative strength, following improved profitability and more favourable operating conditions.

While, Howden Re also reported that risk-adjusted property catastrophe reinsurance rates ranged from flat to down 20% at the June 1 renewal.

Overall, the mid-year renewal period reflected a more balanced market environment. Improved legal frameworks, solid industry capital, and favourable ILS market conditions are supporting a more stable, though still selective, return of reinsurance and retro capacity in Florida.

Read all of our reinsurance renewal news coverage.

Florida reinsurance & retro capacity increased at mid-year, with ILS support: Fitch was published by: www.Artemis.bm
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The California Earthquake Authority’s (CEA) risk transfer tower increased in size after the organisation renewed slightly more reinsurance protection at April 1st than was maturing, leaving it with almost $7.8 billion of risk transfer in-force.

When we last reported on the CEA’s risk transfer arrangements, the insurer had just over $7.72 billion in-force, at February 28th 2025.

With almost $1.124 billion of traditional reinsurance set to expire at March 31st this year, the latest disclosure from the earthquake insurer shows that it renewed $1.2 billion of limit at the April renewal.

As a result, traditional and collateralized or fronted reinsurance limit grew to just over $5.34 billion, up from the February figure of almost $5.27 billion.

The catastrophe bond component of the CEA’s risk transfer remained stable at $2.455 billion as of April 2025.

Which left the cat bond component of the risk transfer tower at approximately 31.5% in April, just slightly down from the almost 32% as of late February.

The CEA has $245 million of its outstanding catastrophe bonds that mature next week.

But, as we’ve been reporting, the insurer is back in the cat bond market with a new Ursa Re II Ltd. (Series 2025-1) issuance, the latest target for which is to secure between $300 million and $400 million of additional reinsurance limit.

Which will increase the amount of cat bond risk capital the CEA has outstanding in the coming days, presumably to between $2.51 billion and as much as $2.61 billion (based on the latest projection), when the new Ursa Re II issuance settles.

But, it is as yet unknown how the CEA has renewed additional reinsurance coverage that expired at May 31st, which amounted to $185.5 million.

While, also at the mid-year renewals, the CEA has a further $120 million of traditional reinsurance that expires after June 21st and a larger $580.75 million that expires at July 31st 2025.

The one thing that is clear, is that the catastrophe bond protection will grow, with no more cat bond maturities to come until the end of November.

Notably though, with the CEA’s risk transfer tower now smaller than it used to be, having at one stage reached just over $9.15 billion of limit as recently as following the June 2024 reinsurance renewal season, the smaller tower is resulting in lower risk transfer expenses for the insurer, as you’d expect.

As of January 31st 2025, the CEA’s risk transfer expenses had fallen by $14 million, a figure that has likely increased with the passage of time and the tower was still slightly bigger at that date than it is today.

Also helping the CEA on risk transfer expenses are the slightly softer property catastrophe reinsurance market conditions and the fact its new Ursa Re II cat bond may come in with a spread multiple lower than issuances completed a year or two ago.

The CEA has $2.455 billion of outstanding catastrophe bond coverage still in-force at this time, but in recent months it has fallen from 3rd to 6th in our cat bond sponsors leaderboard as other sponsors grew their cat bond protection.

View details of every catastrophe bond sponsored by the CEA in the Artemis Deal Directory.

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A former China Construction Bank employee is facing bribery charges in Hong Kong, accused of accepting payments in a crypto currency amounting to US $470,000 from a Vesttoo employee, to authenticate false letters of credit and collateral documentation.

While a number of court cases remain ongoing, although not moving at any meaningful pace, in relation to the Vesttoo reinsurance letter of credit (LOC) collateral fraud, criminal cases have been absent from the saga until now when a Hong Kong bribery case has taken aim at a former China Construction Bank employee.

Recall that, China Construction Bank was the financial entity that purportedly issued billions of dollars of letters of credit (LOC) that were used to collateralize reinsurance agreements in transactions involving the now bankrupt Israeli insurtech Vesttoo.

More traditional reinsurance than ILS, those agreements turned out to be supported by thin air as the letters of credit (LOCs) turned out to be forged.

As the bankruptcy of Vesttoo moved forward, details emerged of a relatively unsophisticated web of fraud, with international tentacles reaching to the Chinese state supported bank and a number of lawsuits launched against China Construction Bank by reinsurance market participants, some ongoing.

In total, almost $3.36 billion of standby letters of credit (LOC) are presumed to have been fraudulently created under the Vesttoo scheme and of that amount, figures Artemis had seen towards the end of 2023 suggested that at least $2.81 billion of those were linked to China Construction Bank.

Emails that emerged during Vesttoo’s bankruptcy case showed that a China Construction Bank (CCB) employee, Chun-Yin Lam, used an official bank email address to communicate with some of the Vesttoo employees that had been accused of perpetrating the fraud.

While this CCB employee, Lam, was also said to have identified the Chinese investor implicated in the fraud, Yu Po Holdings, as a client of the bank (Yu Po Holdings was the name of the primary investor in reinsurance transactions involving fraudulent LOCs issued by CCB for Vesttoo reinsurance deals), questions remained over whether Yu Po actually existed as an investor, or was merely a shell used for the fraud. Many continue to believe the latter was the more likely scenario.

This same, now former CCB bank employee is at the heart of a new bribery and corruption case in the Eastern Magistrates’ Courts of Hong Kong.

The Independent Commission Against Corruption (ICAC) of the Hong Kong Special Administrative Region has now charged two former bank managers, one being the aforementioned Lam, for “allegedly conspiring with an employee of a fintech company to use various false standby letters of credit (L/Cs) and collateral letters.”

That fintech was, of course, Vesttoo.

The ICAC explained, “Pursuant to the further legal advice of the Department of Justice upon completion of investigation by the ICAC, an additional bribery charge was laid against one of the duo while the indictment in relation to the two counts of conspiracy to use false instruments were amended when the case was brought to the Eastern Magistrates’ Courts for mention today (June 5).

“The additional charge alleged that the defendant had accepted cryptocurrency worth over US$470,000 from the fintech company employee, a middleman and others for authenticating false instruments. The case will be transferred to the District Court.”

Lam, a former relationship manager of China Construction Bank (Asia) Corporation Limited (CCB (Asia)), has been charged with an additional count of conspiracy for “an agent to accept advantages, contrary to section 9(1)(a) of the Prevention of Bribery Ordinance and section 159A of the Crimes Ordinance,” the ICAC said.

Lee Ka-man, a former senior relationship manager of Standard Chartered Bank (Hong Kong) Limited (Standard Chartered HK), which was another bank named as having been identified on some of the fraudulent letters of credit that Vesttoo had used for its reinsurance transactions, as well as Lam now each face one count of conspiracy to use false instruments as well.

After a hearing today, the defendants have been granted bail and the prosecution are seeking to transfer the case to the District Court for plea.

The ICAC said that its investigation into the allegations against the bank employees stemmed from a corruption complaint.

The ICAC further explained, “The bribery charge alleged that Lam had accepted bribes, namely Tether, a cryptocurrency, worth totalling over US$470,000, from an employee of Vesttoo Udi Ginati, a middleman Wan Cheuk-lun and others for authenticating standby L/Cs and collateral letters which were purportedly issued or endorsed by China Construction Bank Corporation (CCB). CCB had, in fact, never issued or endorsed those documents.”

Ginati was cited as an alleged participant in the fraud by Vesttoo itself, after an internal investigation it undertook back in 2023.

It’s perhaps worth noting that in early 2024 an attempt by Vesttoo to recover damages from those alleged former employees it believed participated in the fraud, including Ginati, failed in a Tel Aviv court.

Hong Kong’s ICAC continued, “The amended charges of conspiracy to use false instruments alleged that Lam had conspired together with the said Vesttoo employee, middleman and others to use 88 false standby L/Cs and two false collateral letters purportedly issued or endorsed by CCB, with the intention of inducing others to accept them as genuine. It was alleged that Lee had conspired together with others to use four false standby L/Cs purportedly issued by Standard Chartered HK with intent to induce others to accept them as genuine.”

The ICAC said that CCB (Asia) and Standard Chartered HK rendered full assistance to the Commission during its investigation into this case.

The Vesttoo saga is the story that keeps on giving.

Given the backdrop to the saga, and all the information that came out about how the web of fraud is alleged to have been committed, none of the allegations made by Hong Kong’s Independent Commission Against Corruption are all that surprising to read.

It is good to see authorities seeking to make progress on getting to the bottom of what happened and potentially bringing those accused of perpetrating the fraud to account. Or at the least, establishing what illegalities may have taken place throughout the saga.

That said, none of this appears to get the industry participants that in some cases lost hundreds of millions of dollars any closer to making meaningful recoveries for the damages suffered.

Read all of our coverage of the alleged fraudulent or forged letter-of-credit (LOC) collateral linked to Vesttoo deals.

China Construction Bank manager accused of accepting bribes from Vesttoo employee was published by: www.Artemis.bm
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