Retrocession news

The new normal in reinsurance markets has won out, as pricing optimism following last years major catastrophe losses fizzles out, while the march and influence of alternative capital continues to impact reinsurers ability to earn back their losses.

Reinsurance giant Hannover Re continues to take advantage of the expanding insurance-linked securities (ILS) sector, and sees further opportunities in a marketplace that is “here to stay,” according to Henning Ludolphs, Managing Director of Retrocessions & Capital Markets at Hannover Re.

Tony Belisle, CEO of Markel CATCo Investment Management Ltd. and a number of Directors of the managers London-listed retrocessional reinsurance strategy, have acquired more shares in the fund yesterday.

The reinsurance market evolution continues and as ever alternative capital and the insurance-linked securities (ILS) market is placed centre stage in any discussion of the disruption of traditional business models, but now that the payback model of the past has expired, a new and more symbiotic model with ILS is emerging.

The retrocessional reinsurance market has become increasingly dependent on the capital markets and insurance-linked securities (ILS), with third-party capital providers beginning to dominate that sector and reinsurers increasingly utilising third-party capital backed retrocession.

The increased size of Markel CATCo Investment Management Ltd.’s assets under management, to which it added another $700 million to meet mid-year demand for its retrocessional reinsurance products, has helped the firm to underwrite a 30% larger mid-year book at the same rates as its January portfolio was secured.

Despite the constant reports of overcapitalisation in reinsurance, S&P reports that the top 20 reinsurance firms in the world have lost their capital redundancy at the ‘AAA’ confidence level for the first time since the financial crisis back in 2008.

The use of insurance-linked securities (ILS), catastrophe bonds and collateralized reinsurance has transformed the reinsurance market and conquered the property catastrophe space, according to S&P, providing companies with a lever to acquire premium growth while still managing and controlling their peak exposures.

Global reinsurance giant Munich Re has followed suit with much of the market, in electing to pass on more premiums to de-risk at a time when the improved market conditions have allowed it to grow its underwriting book on the front-end.

Akinova, a digital risk trading insurtech start-up that is developing a platform where insurance and reinsurance related risk can be traded, has added another senior advisor in Susan Estes, a Wall Street veteran, as well as co-founder and CEO of bond trading platform OpenDoor.