Philadelphia partner Steve Baker and New York partners Tom Dawson and Joe Seiler participated in a Reactions roundtable to discuss whether alternative capacity ploughing into cat bonds and collateralized reinsurance vehicles is here to stay and whether it is more of a threat or an opportunity for the industry. Reactions published an article on the event.
When posed questions regarding the impact of money coming into the insurance and reinsurance industry from alternative capital such as hedge funds and pension funds becoming increasingly profound, Tom, Joe and Steve shared the following.
Tom said, “Based on conversations with clients and a recent visit to Bermuda, everything you read and hear suggests that almost every international property/casualty reinsurer has a division, a platform, a unit that is engaged in accessing, selling to, investing in and dealing with capital supplied by people who are not necessarily long-term players in the insurance and reinsurance world.
Joe added, “We are regularly in Bermuda and we have found when we were down there that, not only is everyone talking about this, but everyone really is doing something or other on this. One of the features that I found most interesting was the discussion that we had with representatives of companies that are trying to come up with new ways of investigating into these notes and thinking about how they’re going to structure a portfolio and some of the issues that they’re finding.”
Steve said, “When this topic was proposed as the subject for a roundtable, it coincided almost to the day with the first sort of critical mass amount of discussion among some of my clients on the life insurance side. It strikes me that the likelihood is probably that the life markets will follow the property/casualty markets where this is concerned.
To read the PDF about the roundtable in Reactions, click here.
To read the article on the Reactions website, click here.