Justin Wallen, managing director of the Hexagon PCC Group in Guernsey, examines the trends currently emerging from the January 1, 2015 renewal season for collateralised reinsurance from his perspective as a transformer cell manager.
The growth of collateralised reinsurance has been well documented. Cat bond returns have been falling, yet bond placements are over-subscribed despite the fact that the multiple of pricing over expected loss also continues to fall. Faced with this environment, a number of ILS funds now seek alternative returns from private placements of reinsurance contracts where they provide the collateral but need a transformer cell reinsurer to write those risks and access the potential returns.
"Collateralised reinsurance contracts have also changed, with a move away from just excess of loss reinsurance and aggregate reinsurance."
Guernsey has seen a dramatic rise in the number of these transactions over the past few years and has established a reputation of turning these transactions around quickly and efficiently.
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Hexagon Group, Guernsey, ILS, renewals