Kalista Launches Crop Loss Warranties
Bermuda based Kalista Global, a boutique insurance and reinsurance services company with a focus on the Insurance-Linked Securities, Catastrophe Bond and Alternative Reinsurance sectors has partnered with New Grange brokers to launch a suite of Industry Loss Warranty [ILW] product offerings aimed at the U.S. and International Multi-Peril Crop Insurance [MPCI] Retrocessional Reinsurance market.
This suite of ILW products, which encompass yield and revenue protection, are the latest to come out of Kalista’s in-house “Esoteric Risks” structuring unit. They utilize AIR Worldwide’s Multi-Peril Crop Insurance Model and Agricultural Weather Index, which integrates data on weather patterns and crop yields with crop phenology, or growing models – which will provide Ceding Reinsurers, or Sponsors, with a clearer understanding of how certain crops react to related regional agrometeorological conditions, in the U.S. and Internationally.
This indexed approach to the payout is superior to an actuarial analysis of underlying historical data as it provides a clear and objective means of measuring losses. By using an index as the proxy for loss this means that there is no need for expensive loss assessments. Utilizing an index also reduces moral hazard and adverse selection and mitigates other issues that can arise with traditional insurance or reinsurance covers.
Spencer Conway [pictured], Executive Vice President of Kalista commented, “The launch of this suite of Crop ILW products, a month after we released our “EPC”, or “ENSO-based Parametric Cover, comes at an exciting time in Kalista’s expansion. In response to express client demand, the evolution of our ILS/W structuring capabilities into more innovative streams of business, is helping provide our Sponsors with additional flexibility to securitize and diversify their risk. It is also helping drive our risk transfer solutions to become a sustainable complement to traditional reinsurance and retrocessional reinsurance.”
Hugh OʼDonnell of Bermuda-based New Grange Brokers said: “This latest product release further reinforces the drive and enthusiasm Kalista has for the continued evolution of ILS/W product development, a vision that New Grange is proud to be a part of.”
