November 6, 2014

Panel of industry leaders at Convergence 2014 to examine changing capitalization of the reinsurance industry

Over the last few years, a variety of new capital structures have significantly changed the dynamics of the reinsurance industry. With no sign that the rate of change is slowing, a panel led by Paul Schultz, CEO of Aon Benfield Securities, will ask – where are we heading?

The panel will bring together top minds in the industry to discuss the topic: How will the reinsurance industry be capitalized in five years’ time? 

Representing the range of structures that are used in the industry today, the panel will include: Costas Miranthis, President and Chief Executive Officer of PartnerRe; Marc Grandisson, Chairman & CEO of Arch Worldwide Reinsurance & Mortgage Group; Lixin Zeng, Chief Executive Officer of AlphaCat Managers; and Anthony Rettino, Founding Principal and Portfolio Manager at Elementum.

ILS Bermuda co-chairman and PwC Bermuda insurance leader, Arthur Wightman, said: “We are delighted to have assembled a panel of this calibre, who will offer their insights into the changing capitalization of the reinsurance industry.”

“The risk transfer market is being stressed by both structured and cyclical forces. These forces are not only creating dislocation but also driving innovation. This is manifesting in new ways of offering protection, new operating models and changes in capitalization of the industry.”

Mr Schultz of Aon Benfield Securities commented: “We have assembled a panel of leaders with perspectives from firms that have leadership positions in the industry today and that will drive change over the foreseeable future.

“New capital inflows into the reinsurance sector have been significant and many firms, including Aon Benfield, are very bullish about future capital inflows. Although capital has largely been deployed into reinsurance opportunities thus far, we are seeing early signs of the capital being utilised directly by clients, potentially altering the traditional underwriting cycle.”

Mr Rettino said: “Elementum is pleased to participate in Convergence 2014. Having personally witnessed the evolution of capital models from the early 90s until today, I welcome the opportunity to consider the changing landscape over the next 5 years and beyond in terms of matching the needs of our investor and insurance company clients. Bermuda is a key base of our operations and the industry at large and an ideal place to consider these topics.”

Mr Zeng of AlphaCat Managers commented: “Given its cost advantage in assuming peak catastrophe reinsurance risks, ILS capital has successfully become an integral part of the reinsurance capital structure. On the other hand, reinsurance buyers continue to place significant value on the continuity of coverage and an evergreen promise to pay offered by traditional capital. As a result, traditional and ILS capital will co-exist and provide complementary benefits to both cedants and investors. Furthermore, based on our analyses, we expect to see an equilibrium of the ILS capital flow in the near future.”

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