At a time when investors are more inclined to use sidecars and other alternative ways to invest in the reinsurance industry, one substantial traditional start-up reinsurer has come into being in Asia.
Not a month seems to go by at the moment without another announcement about one of the big reinsurers forming a sidecar or similar vehicle to allow capital markets investors to gain exposure to reinsurance. The appetite of the investors is healthy and reinsurers are keen to get in on the act or risk getting left behind in what some believe represents a new model for the industry.
It was not always like this. The traditional hard-soft cycle of reinsurance rates had historically been uniquely characterised by batches of new reinsurers being formed—almost always on Bermuda. As each was staffed with experienced industry veterans with their own impressive list of contacts it always made for an interesting renewals season. And these companies grew—gradually changing the very landscape of the industry they had entered.
Although at present the industry is far from in a hard market, substantial levels of new capital have entered the industry, but through new vehicles and mechanisms such as sidecars instead. It is, therefore, worth looking more closely at the one start-up we have seen come into being—not in Bermuda but in Hong Kong.
Peak Re, Reinsurance, Fosun International, International Finance Corporation, Franz Josef Hahn