Monte Carlo Reinsurance Rendez-Vous news

Historically, the reinsurance industry has picked up the tab at the Monte Carlo Rendez-Vous event, in a demonstration of the capacity providers keeness to maintain the good relationships they have with cedents and hold onto shares in their renewal programs.

If the insurance and reinsurance industry is to truly narrow and ultimately close protection gaps, the upsurge in demand for cover that would result from this means the capital markets have a key role to play, Christian Mumenthaler, the CEO of global reinsurer Swiss Re told us recently.

The delta between pricing in insurance-linked securities (ILS) and traditional property catastrophe reinsurance is providing “a clear signal” to the market and provides further competition for peak risks, Aon’s Reinsurance Solutions has said.

One of the talking points at the Monte Carlo Rendez-Vous over recent days was the expectation that more demand for catastrophe reinsurance will emerge at the higher layers of ceding company towers, something which should help to ensure the catastrophe bond market continues to expand.

Analysts from investment bank Berenberg have said that investors may, at this time, be more open to allocating capital to reinsurance via insurance-linked securities (ILS) vehicles than through any new “Class of” startup companies.

The market for alternative reinsurance capital and insurance-linked securities (ILS) is set to bifurcate, as investor preference sees more capital rotating into catastrophe bonds in search of more stable performance, Swiss Re believes.

There is more optimising on the potential for retrocession capacity to be more available towards the end of the year for the January 2024 renewals, with conditions having improved and some fund-raising possible, Lara Mowery of Guy Carpenter said last week.

Right now and for the medium-term, in the world of insurance-linked securities (ILS), “liquidity is king”, according to Erik Manning, Director at BMS Re in Bermuda, who believes ILS managers need to focus on finding more liquid ILS investment structures to offer to their clients.

Analysts at S&P Global Ratings explained in Monte Carlo this week that the reinsurance industry remains in a hard market, especially in property catastrophe lines of business, with the balance of power sitting with reinsurers and more demand for protection expected to come, providing new opportunities.

While the catastrophe bond space is expected to continue growing, due to its track record and performance, Stephan Ruoff, Global Head of Schroders Capital ILS is also bullish on private ILS transactions, although acknowledges that investors will want to see a period of improved returns from this segment of the ILS market.