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XL CEO says new capacity likely to come from alternative capital arrangements


Greg Hendrick, the CEO of Bermuda based XL Insurance, says that he does not expect to see a new wave of large re/insurers set up in Bermuda, as they have after previous spikes in demand for re/insurance capacity. Instead he says we should expect to see an influx of smaller alternative capital arrangements such as catastrophe bonds and sidecars.

Hendrick’s comments were made in an interview with Bermuda’s Royal Gazette at the recent RIMS conference. He doesn’t see the market as dislocated enough to stimulate the creation of too many big re/insurers.

“I believe the future, in terms of new capital coming up, will be in sidecars and other types of arrangements that aren’t fully fledged new companies but rather capital accessing existing management teams and expertise.”

Hendrick see’s the new influx of capital into these alternative arrangements as a positive one.

“I’m a big believer,” said Hendrick, referring to these alternative capital arrangements. “We executed one of the early sidecars, Cyrus Re, after 2005 with $500 million in capital. We have bought cat bonds in the past and we have traded with some of the ILS-specific funds in terms of ceding some of our risk over the years to them.

“We are very big believers that that is a market that will complement the existing insurance and reinsurance capital not only in Bermuda but globally as well.”

Find the full article here on the Royal Gazette website.

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