News


hristopher Donelan, chief underwriting officer of Endurance Re US, has questioned


whether third party capital reinsurance providers will pay out on claims in the wake of a big catastrophic event. The firm’s US president reopened the debate surrounding the viability of what


remains a


relatively new form of risk transfer by declaring that he didn’t know who was “holding the bag” when it comes to insurance-linked securities (ILS). “I have questions about


insurance and who is ultimately holding the bag,” he said. “I know it is ‘collateralised’ but there is a whole lot of collateralised business out there. Are all those collateralised units—and it is a big number—legitimately collateralised? Is this going to be easy to collect? “Say there is a trillion dollar event. Is it going to


be as easy as it sounds to collect claims payments? I don’t know. As far as I know the numbers of collateralised units are not being tracked. “Is there a willingness to pay here? I don’t know.


I’m not sure if it is a problem, I just don’t know.” Despite his reservations over that form of risk


transfer, Donelan was very positive about some of the opportunities open to the industry. He identifies flood risk as a product with a “huge upside” and he can’t understand why


27.10.15 TUESDAY


Endurance: ‘who is holding the ILS bag?’ C


Christopher Donelan collateralised


firms are not already writing this risk. He believes it should be privatised as it is “something that we do for a living”. “It’s risk and it’s insurable and it should have


a price,” he said. “Flood is a product we should be doing as an industry—there is no good reason why we shouldn’t. “It’s insurance with all the characteristics


of an insurance product. Some people may say certain areas may not be insurable, but I think everywhere is insurable. It’s going to be an interesting product going forward. “Anything is doable at the right price,” he said. He admitted that the shift of such risks from


governments to the private sector would not happen overnight. “But I do think it’s going to happen,” he said. “I would hope that within the next 10 years


we will be able to solve this issue.” Donelan went on to say that the key to


surviving in any market environment—good or bad—is the quality of the people you surround yourself with. “One thing that you can control is people.


When you have talented people and hard work it’s always going to work out and that’s the key to survival more than anything.” He slated the industry for not doing more to


nurture talent, particularly within the reinsurance sphere, “There’s plenty of talent out there but it has


not been developed. We haven’t had training programmes, we haven’t had mentoring situations and I am not sure how many people we have added to the business over the years. We have seen more sophistication around hedge funds, for example, which is good—it ups everyone’s game,” he said. He revealed


convert to the discussions surrounding cyber insurance after originally being against product development in this area. “I am starting to come around a little more. We are getting smarter at it,” he said. At the end of the day Donelan is an old- fashioned insurance man. “We underwrite and the chips fall where they fall, it’s as simple as that,” he said. n


New Horseshoe unit to help asset managers form reinsurers B


ermuda-based insurance manager Horseshoe Group has formed a new unit designed to


help asset managers form their own reinsurance company without significant start-up costs. Convergence Risk Services (CRS) will use


the existing platform and capabilities Horseshoe offers in the management of reinsurance companies, according to the firm. It will form standalone


underwrite on behalf of CRS clients. Horseshoe chief operating officer Brenton Slade has been appointed as chief executive officer (CEO) of CRS. “We are extremely excited about the formation


reinsurance companies for asset


managers seeking a cost-effective way to form their own reinsurance company without large initial capital expenditures. CRS has successfully licensed the first


reinsurer on its platform, according to Horseshoe. Steven Musicant has been hired by CRS to act as its new chief underwriting officer. He will


12 | PCI TODAY | DAY 3: Tuesday October 27 2015


of CRS and our ability to leverage our existing infrastructure to provide full-service solutions in the formation of these type of reinsurers,” said Andre Perez, CEO of Horseshoe. “We believe there will be a significant demand


from small and medium-sized asset managers to form cost-effective reinsurers to enter the casualty market. Taking a page out of the ILS market book, the reinsurers on the CRS platform will fully collateralise their obligations which will give them top reinsurance security without the need of an agency rating.” Slade added: “CRS will effectively act as a


that he has become a late


launch pad for this type of reinsurer by providing a cost-effective solution to start operations without committing to significant costs until the business ramps up. “CRS is unique in its ability to provide


market-facing underwriting services to clients on our platform and Steve Musicant has an excellent underwriting track record. We view this as the next generation in casualty underwriting and a new chapter in convergence products expanding outside of the property-catastrophe markets.” The first asset manager-sponsored reinsurer to


be launched on the CRS platform is intending to combine the casualty reinsurance underwriting expertise of CRS with an actively managed investment portfolio. n


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