Vantage Risk – set up to utilise ILS right from the beginning: CEO Hendrick

Vantage Risk, the insurance and reinsurance start-up launched in time for the January renewals, was set up to use insurance-linked securities (ILS) capital and structures right from the start, co-founder and Chief Executive Officer (CEO), Greg Hendrick said today during the SIFMA IRLS 2021 event.

Vantage Risk launched as an insurer and reinsurer with a flexible remit to utilise the best and most appropriate capital and capacity sources available to it, Hendrick explained to an audience at SIFMA’s latest, and this year virtual, Insurance and Risk Linked Securities conference.

Part of this is a commitment to using efficient capital to extend the underwriting reach of Vantage, a theme that was also reiterated in the next session of the SIFMA IRLS event where new cat bond sponsors said growth was one catalyst for drawing them to the catastrophe bond market.

As we revealed last week, Vantage Risk is also now becoming a first time catastrophe bond sponsor, with a $150 million Vista Re Ltd. (Series 2021-1) North American multi-peril deal currently in the market.

But Vantage’s use of alternative sources of reinsurance capital and ILS extends beyond just cat bonds and from Hendrick’s comments today it’s clear the company intends to make ILS a core component of its business model.

“We’ve deliberately set up Vantage to underwrite both insurance and reinsurance and utilise ILS from the very beginning,” Hendrick explained today.

Adding that the company is “committed” to using all sources of capital that are appropriate to help it extend its reach with clients and partners.

Hendrick said that Vantage wants to work to help the global mission to narrow the gap between economic and insured losses, hinting at one way the company can leverage ILS investor appetite to assist as it takes on more peak risks around the world and grows its catastrophe book.

“We formed Vantage with a conviction that third-party capital would play a huge role in allowing us to see that risk differently,” he explained.

“In short, ILS has proven itself as a stable capital provider over the last years and Vantage intends to incorporate ILS as a core part of our insurance and reinsurance strategy.”

But Hendrick also noted a desire to look beyond pure catastrophe risk when it comes to use of ILS structures, so it seems nothing is off the table for Vantage Risk, as long as it is a prudent use of capital from investors with aligned goals and that can help it to extend its usefulness for clients.

In fact he specifically mentioned securitizing cyber and excess casualty, as well as other long-tailed lines of business.

Hendrick said that Vantage will use capital to extend its reach with partners that want a specific type of risk.

“We’re going to explore the many ways that we have to access ILS capital.

“We started modestly, with AdVantage, a collateralised retrocession special purpose vehicle we set-up with one of our partners,” he explained, before adding that Vantage means what it says when saying this is going to be a big part of its strategy.

We covered the launch of the AdVantage Retro I Ltd. collateralized insurer class company based in Bermuda and sponsored by Vantage Risk back in January.

Hendrick said that Vantage hopes to “bring capital to bear on new risks as well” saying that “we’re looking to be curious and creative and close that gap I’d mentioned earlier between insured and economic loss.”

Highlighting the importance of access to efficient capital when building a new insurance and reinsurance company, Hendrick said, “We know we need to go beyond our capital-base at Vantage and harness the capital markets.”

Vantage Risk had always appeared to be planning to make third-party capital a key component of its operations, having revealed a strategy featuring the build-out of insurance-linked securities (ILS) capabilities to help in driving growth.

Vantage also made some key hires that hinted at its ILS capabilities, including Chris McKeown (former CEO of ILS asset manager New Ocean Capital Management) and Aurora Swithenbank (former Partner and Head of Insurance in the Americas Financing Group at Goldman Sachs).

CEO Hendrick later told us in an interview that 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.