Third-party reinsurance capital news

Barbican Group, an insurance and reinsurance firm with a Lloyd’s focus but headquartered in Guernsey and backed by private equity investors, has launched a new Guernsey domiciled reinsurer which will focus on underwriting specialty business on a collateralized basis and will raise third-party capital, according to the firms CEO.

Large global reinsurers expect flat reinsurance renewals and continued growth, despite sources of alternative capital and other market developments potentially denting their share, through their diverse business mix and a continuing expansion of the demand for reinsurance around the world.

With alternative capital one of the hottest topics at the Monte Carlo reinsurance Rendezvous over the last few days the subject of consolidation, mergers and acquisitions has been raised in many discussions and briefings.

The major global reinsurance firms have made clear their opinions on, and reactions to, the recent flow of capital into the reinsurance market from third-party investors, with sometimes defensive statements that can leave listeners wondering whether the nervousness runs deeper than reinsurers are making out.

Global reinsurer Swiss Re said at a media and investors briefing today that it believes the recent growth in alternative capital in the reinsurance market has largely been driven by collateralized reinsurance, above inflows into other instruments such as catastrophe bonds, insurance-linked securities and industry loss warranties.

As alternative capital, sourced from institutional and other third-party investors, continues to flow into the reinsurance market at pace thoughts at the Monte Carlo Rendezvous event turn to how this will change the structural landscape for reinsurers. One possible end result could be a displacement of traditional equity reinsurance capital, according to broker Willis Re.

Lloyd’s chairman John Nelson had the chance to expand on his thoughts on alternative capital in reinsurance at the Monte Carlo reinsurance Rendezvous this morning when he spoke at PwC’s breakfast briefing. Nelson said that new forms of capital can help the commercial insurance market grow from $600bn to $2tn by 2025.

AQR Re Ltd, the Bermuda based reinsurance firm which operates as an affiliate of global investment-management firm AQR Capital Management, has hired a senior retrocessional reinsurance specialist, Martin Vezina, who will take on the role of Chief Underwriting Officer.

The insurance-linked securities market is calling for innovators and ‘fast followers’ to drive the sector’s growth forwards, according to a new report from PwC. Innovators will seek out new opportunities for ILS in order to grow the market and the alternative reinsurance capacity it provides.

Competition from third-party and alternative capital in reinsurance is of similar significance to the sector as the emergence of Bermuda as a reinsurance hub and the entrance of its companies over the past two decades, according to Standard & Poor’s in a paper on the global reinsurance sector.