reinsurance securitization

Last year investment bank Goldman Sachs highlighted alternative capital in reinsurance as a key disruptive theme to watch in business today. This year banking and investments giant Citi Group has highlighted insurance securitization as an important disruptive innovation.

The recently closed Embarcadero Re Ltd. catastrophe bond, which saw the California Earthquake Authority transfer $150m of earthquake risk directly to the capital markets through their own SPV, shows that cat bond coverage can be comparable (and even cheaper) than the equivalent reinsurance coverage.