Howden Re launches Novark, to modernise ILS infrastructure, insurance management, securities admin

Howden Re has today launched Novark Group, a new venture that promises to modernise core pieces of insurance-linked securities market (ILS) infrastructure, through a digital-first insurance management and securities administration platform, as well as a risk transformer named Novark Re.

Howden Re said that Novark is the first platform for insurance investors and ILS market participants that can provide near real-time data updates on their investments.

The platform is also relevant to other types of alternative capital and structured reinsurance arrangements as well, in how they are established, administered and managed.

The goal is to “make insurance risk more accessible to capital,” while providing investors with “greater
transparency, control and the ability to actively manage their investments,” the reinsurance broking company explained.

In addition, through Novark and its platform, institutional capital can benefit from a more accessible route into insurance risk investments, with which Howden Re aims to help “create the conditions for greater participation in the market.”

It’s important to note that we understand Novark is a facilitation, management and administration platform, aiming to modernise and ease investor access to the returns of insurance and reinsurance investment opportunities. It does not provide investment management services, or portfolio management expertise.

Leveraging the breadth of Howden’s group specialisms and capabilities, Novark aims to work with investors and other market participants to set up and manage tailored structures and solutions through which capital can participate in insurance risk.

As a result, the decision to invest and whether a strategy is appropriate is down to the investor or capital provider, we understand, while Novark provides a range of structuring, infrastructure, ongoing insurance management and securities administration services for a transaction.

The platform consists of Novark, a technology platform designed to modernise how institutional capital accesses and manages insurance risk, Novark Management Ltd., a Bermuda incorporated insurance management and securities administration company, and Novark Re Ltd., a Bermuda based Class 3 insurer and segregated accounts company that can act as a transformer, or risk transformation vehicle.

Novark can provide its services to ILS and insurance risk investment transactions whether they are executed through its risk transformation company Novark Re, or a third-party vehicle, we understand.

With the launch of Novark Group, Howden Re aims to address what it sees as a growing disconnect in the alternative reinsurance capital market, that despite the growth and advances in insurance-linked securities the market infrastructure has failed to keep pace.

Information and processes are fragmented across different participants and systems, Howden Re believes and Novark’s technology is designed to resolve that while also providing greater visibility and transparency into insurance and reinsurance investments.

Novark aims to bring a “capital markets-grade experience to insurance risk” by creating a single digital environment in which market participants can access clearer and more consistent data in near real-time.

“The platform is designed to give investors greater visibility and control over their investments, while providing insurers and reinsurers with a more connected way to access and manage third-party capital,” Howden Re said.

Through the insurance management and securities administration entity, Novark Management Ltd., the new group will support a range of market participants, from investors to ILS funds and ILS managers, insurers, reinsurers and brokers, combining specialist expertise with technology alongside the ability to leverage Howdens’ broader ILS, capital, reinsurance and advisory expertise, all with the goal of making the experience and process more seamless, transparent and efficient.

Howden Re said that Razi Naqvi, currently Chief Innovation Officer of the reinsurance broker, is leading the ongoing build-out and implementation of the Novark platform.

“Insurance risk has developed into an increasingly important institutional asset class, but the infrastructure around it has not evolved at the same pace,” Naqvi explained.

“If we want to attract more capital into the market, investors need the transparency, control and confidence they expect when investing elsewhere.

“Novark brings that capital markets experience to insurance providing the first near real-time data on how their insurance investments are performing. Investors should be able to see what is happening to their investment, understand it and act on it. By bringing participants onto the same digital infrastructure, and providing that unprecedented visibility this makes insurance risk more accessible to institutional capital, while giving insurers and reinsurers a more efficient way to access and manage third-party capital.”

Alex Bridges, CEO Howden Re Bermuda, added, “Alternative capital is already fundamental to the reinsurance market, but there is a much bigger opportunity if we can make insurance risk easier for institutional investors to access, understand and manage. Novark offers purpose-built technology and infrastructure to support both established and highly innovative risk transfer structures. It also allows Howden to support clients across the full lifecycle of risk transfer, from advisory and structuring through to ongoing administration, governance and reporting.

“Bermuda is the natural place to build it. This is where reinsurance, ILS and institutional capital already come together, and Novark gives us an opportunity to help take that convergence to the next stage.”

Howden Re believes that investors in ILS and insurance risk deserve the same kind of transparency, reporting, accountability and operational certainty they benefit from in other institutional asset classes, which is where it feels there is a current disconnect that Novark can resolve.

Novark aims to be an operational backbone for the ILS and insurance risk asset class, throughout the lifecycle of transactions and investments.

The platform will offer investors with greater visibility into their positions and capital use through a digital-first experience, while providing cedents and reinsurers with greater confidence through the transaction lifecycle, particularly around collateral funding, administration and ongoing management, Howden Re said.

Novark’s launch is a bold move, as it extends Howden’s services beyond origination, structuring and placement, into the ongoing management and administration of ILS and other alternative capital or structured reinsurance transactions.

The company does not want to stand-still with Novark either, promising to follow a strategy of continuous innovation, to meet evolving client needs and create new solutions, products and capabilities to further develop and advance the intersection of insurance and capital markets.