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PCS - Emerging Risks, New Opportunities

BMS planning capital markets broker-dealer, BMS Capital Advisory


BMS Group, a leading independent insurance and reinsurance intermediary and broker, is planning to launch a unit dedicated to taking advantage of the growing opportunities in the insurance-linked securities (ILS) space. The unit will be named BMS Capital Advisory and will offer a full range of capital market ILS products.

The news comes at a time when many reinsurance companies have been launching dedicated capital market and ILS focused teams. As the ILS market grows and more reinsurance markets offer convergence capacity, there will be a need for brokers to be up to speed on the space and to be able to offer products to tap into third-party and collateralized reinsurance capital.

Brokers, like reinsurance underwriters, would risk being left behind if they did not have ILS and capital markets capabilities, if the projections that third-party capital will continue to flow into reinsurance come true. Brokers will need to be able to offer their clients ways to access these new forms of capital as part of a holistic re/insurance brokerage offering.

BMS Group is putting itself in a position to be able to maximise the growth opportunities that the ILS market can offer. The broker already has an active and respected practice in industry-loss warranty (ILW) broking and the addition of full ILS broker-dealer capabilities will open many more opportunities for both BMS and its clients.

Romulo Braga, currently a senior vice president in BMS’ property & casualty reinsurance team based in London, will lead the effort to form the ILS and capital markets focused BMS Capital Advisory. Before joining BMS at the start of 2013, Braga worked at Aon Benfield during which time he worked alongside the Securities unit on reinsurance capital markets opportunities. We asked Braga some questions about BMS’ plans to get a better picture of the activities that BMS Capital Advisory would be undertaking.

Braga told us; “The interest by institutional investors in the alternative capital space is at an all-time high and has become an integral part of a risk management strategy. As such, BMS Group has identified the formation of a broker-dealer as a key strategic development area, in order to maintain its role as the complete reinsurance broker providing a full suite of products across the reinsurance capital spectrum. BMS’ capital markets division will be called BMS Capital Advisory and will cover a full range of capital market products, especially private ILS issuances, which would neatly suit our client base.”

A focus on private ILS and catastrophe bond transactions would make a lot of sense for BMS, with the main 144A ILS and cat bond issuance market seemingly dominated by a number of the top brokers capital markets divisions. That said, if BMS Capital Advisory can build a specialism in ILS, it may find it can tap into opportunities to structure or market 144A ILS and cat bonds for any existing clients which want to become sponsors.

Braga will lead the new broker-dealer unit and a number of other existing BMS staff who have a focus on the ILS and alternative reinsurance markets will operate under the new BMS Capital Advisory name. Braga explained; “I will head BMS Capital Advisory, incorporating the expertise of existing BMS staff, including ILW broker Stefano Nicolini, senior catastrophe brokers Jacob Porter, who previously helped manage an ILS portfolio for Magnetar Capital, and Brandon Hopkins.”

BMS Group has been heavily investing in its own infrastructure and organisation in the last couple of years and this puts it in a strong position, Braga said; “In 2012, the Group made significant investments in the overall business, and BMS Capital Advisory will certainly benefit from the human capital and sophisticated analytics resources BMS Group now offers.”

BMS will continue to focus on what it does best, providing solutions to clients to serve their risk transfer needs. By adding capital markets and ILS capabilities it is adding a new option to the range of products it can offer its client base.

Braga explained; “BMS has consistently focused on clients and business areas where we can add value and bring our specialist expertise to bear. Our clients tell us they value our independence and our partnership approach. We will continue to work alongside them to secure effectively priced reinsurance capacity from diversified sources, be it traditional reinsurers, collateralized markets, or ILS funds. We believe our focused approach to servicing a differentiated client base will allow us to work with capital markets providers to create, execute and facilitate effective solutions to a new class of ILS sponsors.”

We’ll bring you more on BMS Capital Advisory when the unit officially launches.

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