Here’s an interesting question for a Friday discussion…
Could you see a day when brokers might begin issuing their own insurance-linked securities such as catastrophe bonds and sidecars? If a broker could take his bucket of risks directly to the capital markets through their own SPV and the notes are set up with a parametric trigger, couldn’t they bypass the need for a re/insurers involvement? Could an investment bank do this for the broker as well, again negating the need for a re/insurer?
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I would say so! I see no reason why some of the big guys couldn’t do this. I mean private companies can so why not insurance brokers?
at least one broker is almost already doing so — placing risk with specific reinsurers, helping reinsurers to issue cat bonds which are then bought both by the broker directly and by a fund in which the broker is the largest investor
Didn’t see any value from brokers as a client in traditional markets. When I see what are their value proposal in ILS/ART, don’t see neither their value added as structurers.
I worked on a similar deal which came to market last year: Puma Re Ltd, arranged by Dresdner where a Lloyd’s broker places cat treaties with a Bermudan SPRV: Puma Re, financed by cat bond. It’s a public deal.