Third-party reinsurance capital news

VisionRe Limited, a reinsurance-linked investment vehicle designed to offer high-net worth and institutional investors access to the Lloyd’s of London re/insurance market, is deferring its capital raising and capacity deployment until 2014 citing a lack of attractive opportunities.

Switzerland based insurance-linked securities (ILS) investment manager Plenum Investments has expanded its capital raising efforts internationally and is actively looking for new investors for its ILS funds in Australia through a recently launched local unit, Plenum Investments Australia.

The preferred terminology used at ILS investment manager Nephila Capital to describe the third-party capital that has entered the reinsurance market, as institutional investors appreciation for catastrophe risk as an asset class has grown, is not ‘alternative capital’, rather it is ‘efficient capital’.

Commercial insurance buyers will face improved market conditions, with rates set to improve in many lines, thanks to the increased availability of insurance and reinsurance capital from alternative sources, broker facilities and new markets such as China, according to broker Willis.

RenaissanceRe, the Bermuda-based property catastrophe reinsurance firm, stands better positioned than many of its competitors to weather the increasing competition from alternative sources of reinsurance capital, according to rating agency Moody’s Investors Service.

According to a report in the Financial Times, one of the world’s largest hedge funds D.E. Shaw which also operates D.E. Shaw Re a Bermuda based reinsurer, is shuttering its flagship funds to new capital as it seeks to safeguard returns for existing investors.

Julian Adams, the Deputy Head and Insurance Director of the Bank of England’s Prudential Regulation Authority (PRA) spoke to the Lloyd’s of London insurance market today and discussed the regulator’s approach to supervision of insurance and in particular the alternative reinsurance capital trend.

Bermuda based insurance and reinsurance holding company Ironshore is to become the first firm to successfully convert a special-purpose Lloyd’s of London syndicate into a permanent syndicate backed by third-party capital from Lloyd’s Names.

The UK’s city regulator, the Prudential Regulation Authority, is set to speak out about perceived risks created by the influx of alternative capital into the reinsurance market through insurance-linked securities (ILS) and catastrophe bonds, according to the Financial Times.

The Lloyd’s of London insurance and reinsurance market recognises that the increasing interest being shown by third-party investors in reinsurance as an asset class poses both an opportunity and a threat to the markets future, according to comments in Lloyd’s latest interim results.