Combined with advanced technology and great talent, Vantage sees the range of insurance-linked securities (ILS) structures as a means to be innovative and expand the set of risks that are covered by the risk transfer space, according to co-founder and Chief Executive Officer (CEO), Greg Hendrick.
Speaking with Artemis around the new re/insurance carrier’s launch ahead of the key and fast-approaching January 1st, 2021 reinsurance renewals, Hendrick discussed Vantage’s ambitions for alternative, or ILS capital as part of its business model.
The company’s reinsurance business is already operational and writing business out of Bermuda for 1/1, and in the near future Vantage will continue to build out what’s expected to become a fairly meaningful insurance operation.
But it’s not just traditional forms of risk transfer that Vantage intends to utilise.
Underpinned by the experience of Hendrick, as well as Chris McKeown, CEO of Reinsurance, Innovation and ILS and Aurora Swithenbank, Chief Financial Officer (CFO) at Vantage, the firm has three senior leaders who really believe in ILS as both a meaningful and long-term participant in the re/insurance market.
“Yes, focused on property cat today, but we think over time ILS can be brought to bear on other types of risks,” said Hendrick.
Adding, “And, so, for us, ILS is a way to really unlock parts of the market. If you’ve got great technology and you’ve got great talent, generally, that brings a lot of curiosity and creativity to things. And, in the mid to long-term, we’re going to be looking to close that gap between economic loss and insured loss, and do it in a way by accessing capital.”
The disparity between economic and insured losses post-event, known as the protection gap, is vast and growing. And, while levels of insurance penetration are far lower in emerging, less developed parts of the world, the uninsured portion of losses, year-after-year, is also high in more developed markets, such as the U.S.
“We’re all fiercely proud of what we have at Vantage, but we’re also cognizant we’re not going to solve the entire world’s problems on that level of economic to insured loss. But, we can be thought leaders around it, we can utilise ILS to help us be creative and increase the pie of risks that are covered, as opposed to just competing for the existing pie,” he continued.
In terms of size and structure, Hendrick explained to Artemis that at the moment, it’s unclear exactly what avenue Vantage will go down.
“Whether that’s cat bonds, whether that’s sidecars, whether that’s funds, whether that’s any other kind of variations and flavours in between, I don’t know yet. But we will be pushing forward on that ILS front,” said Hendrick.