Alternative reinsurance capital

Across the market, carriers are receiving requests for replacement capacity to support billions in risk, in the wake of the Vesttoo-linked collateral fraud scandal, with some set to benefit from an unexpected opportunity to deploy more limit at a time of year when books are often relatively static, Artemis has learned.

Senior Markel executives have said that any dislocation seen in the program fronting space of the insurance market should benefit the State National business, which appears a possible reference to challenges affecting the sector after the alleged collateral fraud affecting Vesttoo facilitated reinsurance deals.

Here are the ten most popular news articles, week ending August 6th 2023, covering catastrophe bonds, ILS, reinsurance capital and related risk transfer topics. To ensure you never miss a thing subscribe to the weekly Artemis email newsletter updates or get our email alerts for every article we publish.

Speaking yesterday, Mac Armstrong, the CEO of Palomar Insurance Holdings, the speciality California-headquartered insurer that offers largely catastrophe exposed property products, disclosed exposure via a single counterparty to the Vesttoo-linked collateral issues, but said this is “immaterial” and could actually constitute an opportunity for his firm.

Higher assets under management and improved returns in the insurance-linked securities (ILS) funds and sidecar structures managed by Swiss Re’s Alternative Capital Partners (ACP) division have driven a significant increase in fee income and commissions earned by the reinsurer in the first-half of 2023.

Root Insurance, the auto lines focused insurtech that also bundles coverage with renters and homeowners products, has exposure to a reinsurance arrangement with links to Vesttoo, but the company’s CFO said it would feel comfortable commuting that and retaining the risk, if it needed to.

Insurance focused investment manager Conning has commented on the news about fraudulent or forged collateral linked to reinsurance deals facilitated by insurtech Vesttoo, suggesting it could add pressure to MGA’s negotiations for capacity deals.

Speaking today during the Markel second-quarter earnings call, Jeremy Noble, President of Insurance explained that the team at insurance-linked securities (ILS) fund manager Nephila Capital are working hard to make the most of the attractive reinsurance pricing environment.

Responding to media reports about the removal of senior co-founders and the potential dismantling of the company, the Board of under-fire insurtech Vesttoo has issued a statement saying they have “no plans to liquidate the company.”

Australian regulator of banks, insurers and pensions, the Australian Prudential Regulation Authority (APRA), has highlighted the viability of insurance-linked securities (ILS) and catastrophe bonds as reinsurance alternatives, saying it recognises their benefits and permits them under the calculation of insurance concentration risk charges.