Women in reinsurance
PrOFILE Name:
Judith Klugman
Company: Swiss Re Capital Markets Job:
Managing director Timeline: 1999—Swiss Re Capital Markets
Judith Klugman has worked for Swiss Re Capital Markets Corporation in New York for more than 15 years and is currently head of global insurance linked securities (ILS) sales. A pioneer of the sector, she believes that the ILS market can seek to grow within the perils it already covers and does not necessarily need to seek new risks yet.
“People talk a lot about increasing the available perils, but the
reality is that a traditional reinsurer and its rated balance sheet can be a very powerful tool for some of these other types of perils and it’s very hard for the capital markets to compete against a traditional product,” she says.
“I’m not sure that the answer is bringing in other perils, but looking at the peak natural catastrophes which could be accessed.”
Klugman believes that with such a large portion of the natural
catastrophe market still unpenetrated, the starting block needs to be in that sector, where currently the level of outstanding cat bonds is roughly 10 percent.
“For us the real challenge is that demand from the asset class far
exceeds supply and sometimes we have to take a step back and ask how big is the pie, so to speak,” she says.
“For example, the pie is $250 billion natural catastrophe and the
level of outstanding cat bonds right now is about $20 billion—10 percent of the overall—so there is a limit as to how much it can grow.
“We need to think about not necessarily transferring different
risks into the capital markets, but instead ask where the need for capacity might outstrip what is available in the re/insurance industry.
“If you look at the broader markets and where credit is spread
for similar risk profiles, this is still very attractive relative to those bottom markets, which is why we see that demand. So what we’re focused on is how do we increase that pie and reach these peak natural catastrophe risks that aren’t buying insurance.”
“What we’re focused on is how do we increase that pie and reach these peak natural catastrophe risks that aren’t buying insurance.”
24 | INTELLIgENT INsUrEr | October 2014
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