Powered by:


MONTE CARLO TODAY Sunday September 13, 2015


New ‘whole portfolio’ ILS asset class could be six times bigger than cat bonds


Partners last week, will help create a new asset class of insurance-linked securities (ILS) that will revolutionise the way insurers manage their capital and which could grow to be six times bigger than the now established asset class of catastrophe-linked bonds. Nick Frankland, chief executive of Guy


V


Carpenter’s EMEA operations and director of Vario Global Capital, told Monte Carlo Today that the venture represents a natural evolution for the reinsurance industry—but that this product could become very important over time as insurers increasingly use it as part of their capital structures. Vario Global Capital will offer non-life insurers


the opportunity to buy high level protection effectively on a quote share basis covering their whole portfolio using structures very similar to the catastrophe-based ILS deals that are now well understood by investors and cedants alike. But the key function of such deals—which will, almost always, be private placements into the capital markets—will not be risk transfer as such, but capital relief for insurers under Solvency II or equivalent regulatory regimes in other countries. This will deliver greater capital efficiency and improved returns on equity. “This is a natural evolution for the risk


transfer industry and it has the potential to be very important and very big,” Frankland said. “If it is as viable and successful as we believe it will


ario Global Capital, the new venture unveiled by Guy Carpenter and Vario


What’s inside


SOPHISTICATED BUYERS ARE AWARE OF OPTIONS, SAYS KINESIS


III: RE/INSURERS WILL RETAIN STRENGTH DESPITE INSTABILITY


UNIPOLSAI ASSICURAZIONI LAUNCHES €500M REINSURER IN DUBLIN


REINSURERS FEAR BEING SINGLE AFTER THE M&A PARTY: GEN RE


M&A AND CAPITAL MARKETS TO DOMINATE TALKS AT MONTE CARLO


ACCURACY VITAL FOR DATA HANDLING, SAYS CATEX


NEW FACES ON THE ILS SCENE


GOSSMANN: A PRE-SOLVENCY II WHIRLWIND


Nick Frankland


be, our estimates suggest that based on take-up levels similar to what we have seen in the cat bond space, this market could grow to become five or six times bigger than that market but with much larger limits and premiums involved as well.” Based on the way the needs of cedants


have changed in recent years, he believes the appetite is there for this product. “We have been increasingly acting as an adviser in recent years as clients want to discuss capital optimisation in the same context as risk transfer, and they want to understand the options available to them,” Frankland said. “We


think the industry would have ultimately arrived at this point anyway but


LIBERTY MUTUAL SEES VALUE IN TRADITION


RISK SELECTION DRIVES INNOVATION AT SWISS RE


THE INDIAN INSURANCE MARKET: WHAT DOES IT NEED?


LOSSES WILL NOT DETER VETERAN ILS INVESTORS: JEWORREK


NEW REGULATIONS DRIVE APPETITE IN LATAM: CARLOU


Solvency II has certainly represented a pivotal point in changing the way insurers manage their risks and seek capital relief. (Continued top of page 2)


Zurich will refine spend; eliminate more reinsurers Z


urich Insurance will continue to ‘refine’ its reinsurance programme in 2016, reducing


or eliminating reinsurers that are not part of the company’s global core relationships. This strategy could be further extended if the company’s acquisition of RSA goes ahead.


Speaking to Monte Carlo Today, Markus Meier,


the company’s head of insurance management, said that Zurich’s reinsurance strategy dovetails with its group risk appetite. This has led to a smaller panel of reinsurers being used over time. “Reinsurance is used strategically—not


www.intelligentinsurer.com | www.bermudareinsurancemagazine.com


opportunistically—at Zurich and it is not a crutch for poor underwriting. We continuously reshape and enhance our reinsurance treaty protections,” he said. “Over the past few years this led to a significant reduction in reinsurance (Continued top of page 4)


DAY 1: Sunday September 13 2015 | MONTE CARLO TODAY | 1


DAY 1


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28