Casualty reinsurance sidecar news

Marsh clients are exploring greater use of third-party capital solutions, including sidecars for liability portfolios, as abundant reinsurance capacity and relatively benign catastrophe losses keep market conditions competitive ahead of the January 1 renewals, according to John Doyle, the firm’s President and Chief Executive Officer.

Casualty insurance-linked securities transactions are complex and require strong alignment, which makes finding strategic partners and understanding their motivations key, while at the same time given the complexity of arrangements such as casualty sidecars, realistic timelines are important, Philippe Trahan of Calidris Investment Partners said yesterday.

Holdings in insurance-linked securities fund structures and reinsurance sidecars made by Eaton Vance through three of its mutual funds have risen in value to approximately $777 million over the last quarter of record, as the asset manager allocated more to its investment in the Swiss Re Core Nat Cat Fund and added a new allocation […]

Strategic Risk Solutions, an independent provider of insurance, reinsurance and captive management and consulting services, suggests that casualty ILS will breakthrough when platforms offer dependable exit mechanisms providing investors entering longer-tail risk with greater certainty, by embedding capital finality from inception.

The reinsurance sidecar market is expected to continue expanding thanks to notable momentum being seen in casualty sidecar structures, according to rating agency AM Best. The firm also highlights that the broader collateralized reinsurance space is poised for future expansion due to greater flexibility in structure, modeling, and perils.

Executives at Howden Capital Markets & Advisory (HCMA) have indicated that as traditional casualty capacity remains constrained, casualty sidecars are becoming a genuine third pillar alongside traditional reinsurance and the balance-sheet, moving beyond being a specialty product for a select number of sophisticated investors.

As asset-driven sidecars expand in the casualty market, focus is shifting from capital efficiency to risk management. Given this, Ledger Investing indicates that turning collateral into a second source of return requires market participants to underwrite the supporting asset portfolio with the same discipline as the liabilities.

Disclosed capital from casualty sidecars since 2024 has surpassed US $2 billion, driven by a specialised investor base taking on long-tail risks, with casualty vehicles accounting for much of the sidecar market’s recent growth, a recent report from rating agency AM Best has highlighted.

With the catastrophe bond market consistently tapping into new and emerging perils, Jason Bolding, Global CEO of Gallagher Securities revealed to us in an interview at the Monte Carlo Rendez-vous event, that Gallagher Securities is currently working on a transaction for a peril that’s never been done before in the market.

Analysts from KBW see the influx of capital into the casualty reinsurance market through insurance-linked securities structures as negative for reinsurers, while on the property catastrophe side they caution that rate softening often tends to be more pronounced than the headlines from the RVS suggest.