b'ILS AND CONVERGENCE MARKETSbond, the collateral for the transaction will betriggers, which are based on measurable physical invested in specific green and/or environmental,phenomena, such as wind speed or earthquake social and governance (ESG) projects by themagnitude, at 5.9% of outstanding transactions, European Bank for Reconstruction andrepresented the third-largest category of trigger Development. Additionally, capital freed up ontype. The remainder consisted of multiple triggers Generalis balance sheet by the bond offering,or bespoke arrangements.which will be invested in additional Generali- Aggregate triggers continued to dominate directed green projects.catastrophe bonds, representing more than half of In July 2021, the Government of Jamaica sponsoredall transactions outstanding at year-end. With these a long-awaited transaction through the Worldtriggers, losses from multiple events are Banks International Bank for Reconstruction andaggregated (typically over a 12-month period) to Developments Capital-At-Risk Notes program. Thedetermine whether the specified attachment level bond provides named storm and hurricanehas been exceeded. This demonstrates one of the protection across almost three hurricane seasonsways in which the catastrophe bond market has and utilizes a parametric trigger. The transactioncome closer to the traditional reinsurance market demonstrates the continued utility of ILS products(where aggregate protection is more common). as a means for sovereigns and emerging markets to2021 saw the entry into the market of new sponsors, manage disaster risk exposure.catastrophe bonds covering new perils and the In December 2021, logistics and warehousingavailability and use of new jurisdictions for ILS focused real estate owner and investor Prologis,issuances. Despite significant catastrophe losses in Inc. (Prologis) sponsored its first catastropherecent years, the continued growth and evolution of bond. The bond provides earthquake protection forthe market demonstrates its importance in Prologis operations in the US, with a large portionproviding claims paying resources and flexible of the risk exposure located in California. Prologis issolutions to sponsoring insurance companies.the latest of a number of new corporate sponsors accessing protection from the capital markets. Sidecars and Managed FundsIndemnity triggers, which calculate payouts basedIn 2021, sidecars remained an important on the actual losses of the ceding company, weremechanism for providing additional collateralized used in a majority of transactions in 2021,capacity to the reinsurance market, while allowing representing approximately 57.5% of allsponsors to participate in a targeted fashion in the outstanding issuances at year-end. Indexproperty-casualty market. Additionally, several transactions (using information from Propertynew programs were established, including the Claims Service (PCS) and PERILS, an industryLaplace-C vehicle by PartnerRe Ltd., Gibson Re by exposure and loss database) were the next largestRandall & Quilter Investment Holdings Ltd. trigger-type, representing approximately 25.0% of(R&Q), and Elevation Re (SPC) Ltd. (Elevation outstanding transactions at year-end. ParametricRe) by Premia Holdings Ltd (Premia).54|Global Insurance Industry Year in Review 2021'