Being able to successfully attract and deploy alternative reinsurance capital can provide reinsurers with some potentially invaluable cost reductions and broader market efficiencies, according to global reinsurance broker Aon Benfield.
The persistent inflow of sophisticated, and efficient third-party reinsurance capital is contributing to the evolution of the global reinsurance industry, which, has seen a host of companies look at adopting new, innovative, and more cost-efficient business models.
“A structural shift in the way capital is raised and deployed to mitigate insurance risk is underway,” says Aon, in its latest Aon Benfield Aggregate report (ABA).
Capital markets investors remain willing and able to assume insurance and reinsurance-linked risks, highlighted by the fact that alternative reinsurance capital continues to increase its share of the overall reinsurance market volume.
As a result of the consistency at which the insurance-linked securities (ILS) space has competed with, and supplemented the re/insurance space in recent times, traditional players now, for the most part, seek to work with the abundance of diversifying, third-party investor backed capital.
“Most ABA constituents are now moving strongly to incorporate alternative capital into their business models. Many are now actively involved in raising and managing third party capital. Others have invested in strategic partnerships with established independent specialist fund managers,” explains Aon.
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