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Alternus brings ILS efficiency to primary property risks: Marsh


Senior executives at insurance and reinsurance brokerage Marsh discussed the recent launch of Alternus, the Nephila Capital backed commercial property insurance facility that brings alternative reinsurance capacity to a retail solution for U.S. company property portfolios, in their recent quarterly earnings call.

CEO and President of Marsh & McLennan Daniel S. Glaser, said that the initiative reflects the need for innovation and it is through the use of advanced technology, data and a desire to provide greater client servicing, that the facility was designed.

Glaser said that Marsh strives to bring better terms and service to its clients and that through the use of advanced technology the broker is able to “Aggregate risks in different ways that can increase efficiencies in the market”, adding that these efficiencies can come from facility arrangements and by providing Marsh clients with access to “broader pools of capital.”

Alternus does exactly that.

Glaser gave a hint at how important he sees the facility as being and what value it will bring to Marsh clients; “This is the first dedicated commercial insurance solution for retail clients backed by a combination of traditional and alternative capital.

He went on to say that Alternus “includes a 7.5% premium discount off of lead pricing for clients,” which is a strong draw that should ensure that the facility gains traction as that level of discount will be extremely attractive.

It’s a reflection of efficiency in the product, thanks to bringing the capital markets, in the form of ILS fund manager Nephila Capital, together with traditional reinsurance from a strong rated carrier like Allianz, and Marsh with its analytics, data, client service and distribution reach.

As a result, Alternus could be one of the first true examples where the real efficiencies of the capital markets and ILS funds can be realised directly by retail buyers of commercial property insurance.

Glaser said that he sees this kind of development as an example of the broker bringing “a stronger value proposition” to its clients.

“Our goal is to deliver broad coverage at competitive terms, and press the industry to meet rising client expectations for service and coverage. Both, trusted advisers and carriers can be commoditized and disintermediated if they become complacent. We all have to prove ourselves everyday by innovating and creating value. Client demand for a better user experience will only rise over time,” Glaser explained.

The Alternus launch is an example of this, with a high touch sales approach backed by efficient capital able to deliver a cost-effective insurance solution to retail clients, with the backing of the ILS market.

Peter Zaffino, Chairman of the Risk & Insurance Services Segment and CEO of Marsh, also discussed the Alternus facility, saying it was an example of Marsh bringing a new insurance solution to market, being creative and innovative, by bringing together strong rated paper from Allianz with the most experienced and largest ILS capital from Nephila.

“Packaging risk with this innovation, driving more enablement for alternative capital to get to the primary market in a thoughtful way, is something that we thought would be well received,” Zaffino explained.

Zaffino suggested that the facility has been well-received as it will bring efficiency to layers of risk that were perhaps over-priced before, with the discounted replacement possible through Alternus a key draw for clients.

“I can’t really predict how big it’s going to be or how much it’s going to expand, but I know that current discussions have been incredibly well received,” he said.

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