Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Sidecar activity demonstrated post-loss opportunity: Aon


Activity in the collateralized quota share reinsurance sidecar space lifted following the major losses of 2017 and with $2.9 billion of limit secured through sidecar deals in the year to June 30th 2018 Aon notes that this “demonstrates the opportunity that both sponsors and investors see following catastrophe events.”

Reinsurance sidecars remain an attractive way for institutional investors and ILS funds to access the returns of major re/insurers, providing an alignment of interests that many enjoy and leaving risk selection up to the traditional firms underwriting teams.

“USD2.9 billion in limit was secured through 17 quota share sidecar transactions that came to market since June 30, 2017. This significant volume demonstrates the opportunity that both sponsors and investors see following catastrophe events,” Aon Securities, the investment banking unit of the insurance and reinsurancr broker, explained.

We tracked the entire $2.9 billion of sidecar issuance in our Deal Directory here, where you can access details of the majority of sidecar transaction ever to come to market.

New sponsors were seen to launch reinsurance sidecars following the major losses of 2018, with vehicles from major re/insurers including MS Amlin, Fidelis, Neon Syndicate 2468 (Neon), Sompo International, and Oxbridge Re.

On this new activity Aon notes, “The emergence of new sponsors highlights that sidecars remain an efficient source of collateralized capacity that can be quickly deployed following catastrophe events.”

As well as the newcomers to the sidecar market there were numerous renewal issuances from existing sidecar vehicles.

“This demonstrates the growing importance of alternative capital for sponsors,” Aon Securities said, noting that a number of these renewal issuances saw the vehicles expanding for their sponsors.

Quota share reinsurance sidecars have been a component of the ILS market for many years now and sidecars are likely to continue to expand, as required, with new sponsors likely to continue coming forwards as well, given they are an efficient way for re/insurers to bring third-party capital into their underwriting operations.

View details of the majority of reinsurance sidecar transactions here.

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