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The Structural Evolution

Does the rapid pace of structural innovation in the market reflect that reinsurers recognise that efficient capital management and capacity deployment is now as important as the delivery of knowledge and underwriting excellence? Are third party capital strategies a competitive advantage for reinsurers, or is the offering of rated and collateralised products now a necessary part of a reinsurer’s strategy to remaining relevant? Our panel discusses these themes.

Discussing alignment of interests, Aditya Dutt, President, Renaissance Underwriting Managers, said: “The cornerstone of aligning interests, in our opinion, is your investors should follow your fortunes, in some way, shape or form. Our long-term vehicles are clearly built on aligning our economic interest with our partners.”

He continued: “We have never done a transaction or sponsored a vehicle where we haven’t put money in . Often we are the largest investor alongside out partners. That’s one way to show it. Another way to show it is to take the risk side by side with your partners. In my view it’s very simple to align interest- it’s have economic skin in the game.”

Guy Swayne, Managing Principal, Nephila

Capital, said: “One of the key things we have done over our 16 to 17 years is continue to evolve. Continue to see what’s going on in the marketplace, and where the need is in the marketplace.”

Discussing new opportunities, he said: “In the last three to four years we have spent a lot of time looking at – in the property cat space, which is the only arena we play in – what we call unmet demand, where there’s pockets of risk that should be in our market that’s being held by governments around the world.”

Mr Swayne added: “At the end of the day we’ve got to provide the solutions and the products that our buyers want and whether that’s rated balance sheet, collateralised, bond form, that’s their decision, we just

need to be able to offer those products, which all three of us do.”

Bill Pollett, President and Chief Executive Officer, Blue Capital Management, said: “One of the things that has happened over the last couple of years and it has really accelerated over the last 18 months is the innovation in our industry. What’s happening is that the different collateralised platforms are bringing innovations to the market that are really making the traditional underwriters think and work much harder ... to find solutions that work for their clients rather than selling the same products they have been selling for the last 10 years - and that’s great for our clients.”

12 Bermuda Reinsurance Conference 2014

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