US mutuals explore collateralised coverage
A rapidly growing number of smaller cedants, thus far ignored on the basis of their size by the true insurance-linked securities (ILS) markets, are working with other providers of alternative forms of reinsurance to supplement their existing programmes with a growing amount of collateralised coverage.
William Pollett, president and CEO of Blue Capital Management and chief corporate development and strategy officer of Montpelier Re, said Blue Capital has developed what are growing relationships with many mid-tier US insurers, many of them mutual – the same companies that have become the core of Montpelier Re’s client base over the years.
“Blue Capital is increasingly working with many of the small mutual US insurers that have been the traditional clients of Montpelier Re,” said Pollett. “They are increasingly seeing the value of buying fully collateralised coverage and working with us because of the long-standing relationship and support that Montpelier has shown them across market cycles.
“Cat bonds and ILS have been around for 20 years now but it generally remains limited to working with the biggest cedants whose reinsurance programmes are often multiples the size of the average cat bond deal size. They are not our typical customers.
“But buying some form of collateralised protection increasingly makes sense for these smaller companies and we are finding they are more comfortable exploring new structures with a business closely associated with a reinsurers they have known and trusted for many years.”
Pollett gave the comments in an interview with Intelligent Insurer used in a supplement distributed at the SIFMA Insurance and Risk Linked Securities Conference, which took place in New York this week.
To read the full article in Intelligent Insurer’s supplement called ILS from all angles, look out for a copy at the SIFMA conference, or email john.walsh@newtonmedia.co.uk to obtain a digital version.
