Alternative reinsurance capital

As the world navigates major challenges, the transitions that are required to do this effectively are going to call on risk capital and the expertise of the global insurance and reinsurance industry, with its capacity, including ILS and alternative sources, seen as a crucial form of financing, according to S&P Global Ratings.

There is rising interest in catastrophe bonds from potential sponsors and the parametric risk transfer space is another area seeing growing momentum, according to Mike Van Slooten, Head of Business Intelligence at Aon’s Reinsurance Solutions.

Fitch Ratings has said that it believes the reinsurance pricing cycle has now most likely passed its peak, but the rating agency is still bullish on profitability of reinsurance and thinks returns from the sector “should remain very strong by historical standards in 2025.”

Broking group Aon has set out its stall for the reinsurance renewals, calling on reinsurance capital providers to run towards risk instead of away from it, else risk the industry becoming less relevant.

Continued high earnings from returns and fresh inflows in the catastrophe bond and insurance-linked securities (ILS) market have driven non-life alternative reinsurance capital up a further 6% to a new high of $113 billion by the middle of this year, broker Gallagher Re has said.

New sponsors should continue to come to the catastrophe bond and insurance-linked securities (ILS) market through the remainder of 2024 and into 2025, while inflows of alternative capital are expected to continue, according to Guy Carpenter’s CEO of EMEA and Global Capital Solutions, Laurent Rousseau.

Rating agency Moody’s has shifted its outlook on the global reinsurance sector to positive citing the improvement in risk/return dynamics in the market and saying it anticipates continued strong profitability if major losses remain absent, while also saying property reinsurance rates are expected to remain elevated.

AXA XL ILS Capital Management, the alternative reinsurance capital and insurance-linked securities (ILS) management division of AXA XL, the commercial insurance and reinsurance unit of the AXA Group, is continuing to innovate as it looks to bring returns from across risk classes to investors through aligned structures.

While the retrocession strategies of Europe’s Big Four reinsurance companies may differ, the still relatively new retro option of sponsoring cyber catastrophe bonds may prove to be an area of commonality between them.

Insurance and reinsurance broker Aon has announced the appointment of Mike Cane as Capital Advisory leader for the United Kingdom, and Yen Chu Choo as Capital Advisory leader for Asia Pacific (APAC).