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DEVELOPING TRENDS

The Reinsurance business is receiving increased interest from the Financial Market as they seek to diversify their own exposures and investments. As time progresses, this development will deliver a new wave of inventive products for the insurance and reinsurance sector.

What “hallmarks” this as a trend is the growth of infrastructure to support it, and the increasing availability and use of sophisticated risk measurement and optimization tools. This allows for:

• More Contract Certainty – The standardized legally-driven language of the new products, combined with the use of published events as recognized “triggers” in covers – such as parametric structures, adds confidence.
• New Risk Transfer Vehicles - Cost effective single-use company vehicles have been developed to assist capital in accessing this sector in either insurance or reinsurance form.
• US Transfer Vehicles  - Special Purpose Vehicles and Protected Cell Companies.
• Increasing Use of Models and Rating Agencies Involvement – this creates additional capacity from investors who require modeled output and a rating to permit them to invest.
• Transparency – the increasing use of legal advisors and rating agencies in these bespoke transactions has created wider interest and this removes the opaque nature of transactions as seen in the past.
• Capacity Demands – with the ever increasing demand for risk in the insurance and reinsurance sector it is now necessary to look for alternative capacity to dovetail with traditional forms of protections.  Banks and hedge funds see themselves filling this role.

The benefit of all these products comes from dovetailing conventional reinsurance with Financial Markets solutions and vice versa.

For more on Emerging Trends, go to:

Carvill Specialty Brochure Page

ReAdvisory’s Services

Banks as a Capital Provider can assist in:

• Provide Letter of Credit (LOC) or loans to insurers and reinsurers
• Provide Investment
• Structure Cat Bonds and Life Bonds
• Securitize Credit Risk, Life and other predictable lines of insurance exposure
• Facilitate Industry Loss Warranties
• Trade in Credit Derivatives
• Provide Underwriting capacity through Special Purpose Vehicles