In the latest in our series of interviews with figures from the risk transfer and insurance-linked securities (ILS) and reinsurance markets, Artemis spoke with Susan Lane, co-CEO of Tokio Solution Management Ltd.
Susan is co-Chief Executive Officer (CEO) at the collateralized reinsurance, insurance-linked securities and reinsurance convergence facilitating arm of Tokio Millennium Re, Tokio Solution Management Ltd.
We discussed the market and how Tokio Solution and parent Tokio Millennium Re became a leading services and solution provider to ILS and the collateralized markets.
Can you tell us a little about your background and the journey to co-CEO at Tokio Solution Management?
Overall, I am very grateful for the opportunities that have been presented to me to advance my career. At university in Ireland, I trained as an accountant then took a job as a captive manager in an insurance company in Cayman. I transferred to Bermuda to be more a part of the industry. I moved away from accountancy and into business development roles and strategic planning at Aon. This happened to be at a time when in Bermuda, the Special Purpose Insurer legislation and ILS market took off. It has been great to say that I have been here from the beginning. I have always been involved in industry groups such as ILS Convergence and the Bermuda Development Agency. My first introduction to Tokio Solution was through Kathleen Faries and her involvement with ILS Convergence. This led to a great opportunity at Tokio Solution. It is Tokio Millennium Re’s (TMR) commitment to making its third party capital strategy core to its business that I am where I am today.
At its core Tokio Solution facilitates transactions for the ILS space, how have you seen the requirements of the market change?
As the market has developed, investors have become more sophisticated. They understand risk and their appetite has grown. Compared to five years ago, the market is more established. Initially, collateralised reinsurance represented only a small percentage of the overall market. Third party capital is now a significant part of the market and participates on a majority of reinsurance programs.
With increased pricing pressure in today’s market, there is still excess capacity and a strong demand for product. Investors are looking for meaningful ways to participate and gain access to risk. Third party capital has proven it is a permanent player and is committed to support the market in the long term. Tokio Solution is looking at further ways to partner with its clients and expand traditional placements through multiyear programs and diversifying territories and perils.
You also help investors or ILS fund managers, particularly start-ups, to access risk. How does that service offering work?
There are two main aspects to how we work with investors or ILS fund managers. One is through our traditional fronting services where our third party capital partners source their own lines and Tokio Solution helps facilitate the transaction by using TMR’s rated paper to face the cedants.
The other way is by providing investors access to risk and products that help grow profitable portfolios for both our third party capital partners and TMR.
Clearly Tokio Solution benefits from its relationship with the parent Tokio Millennium Re. Given its expertise in stop-loss and other major reinsurance transactions, how do you leverage that to broaden your client offering?
Tokio Solution is an integral part of TMR’s third party capital strategy. Because of our relationship with TMR, we are able to leverage TMR’s expertise in analytics and modelling as we work with our third party capital partners to manage and facilitate innovative collateralised reinsurance contracts and structures.
In addition, given TMR’s ratings and its backing from the Tokio Marine Group, we are able to offer stop loss protection through TMR for certain of our third party capital partners, which sets us apart. It provides our partners with the ability to add leverage to their collateralised risk portfolios, which allows them to have a more sophisticated and efficient capital management strategy. Such a product allows the funds to be more agile and responsive to market changes.
Finally, what’s next for Tokio Solution and Tokio Millennium Re in the ILS space?
As we all know, the ILS space is a rapidly changing market. Through our relationship with TMR’s Capital Solutions unit, we can facilitate broader access to risk for our third party capital partners. We also continue to find innovative ways to respond to our partners’ needs and work together to respond more quickly and effectively to market changes and stay one-step ahead. One such example is, together with TMR, we are in the process of developing a technology platform, which will enable our clients to access risk more efficiently and effectively in real time.
Our thanks to Susan Lane for her time.
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