Industry well placed to handle cats
The industry is better prepared to deal with large catastrophes than ever before, a factor which has been assisted by convergence capital, according to Alastair Speare-Cole, CEO of JLT Re.
“The ability of the industry to respond to catastrophe losses has been proved over the last few years,” he said. “Just look at Hurricane Sandy – it didn’t make a substantial difference to ratings, except in possibly sectors of the marine market.”
The additional capital, which continues to flood the market, has received mixed views from the industry, however, and, as Speare- Cole explains, it is not something that should be simply branded as good or bad.
“If you step back from it, I think that it’s a good thing that there are a lot of people who are willing to take society’s risk transfer into the capital markets, however, there are those who will not view it positively.”
He adds: “It’s a continuation of what has been before but at an accelerating pace. Everyone has a different view about the new abundance of alternative capital, and for some its welcome capacity, for some it’s a threat and for some it’s a diminution of profitability, so it’s hard to say whether this is simply a good or bad thing.
“There is now a complicated interaction between different parts of the capital markets, with different appetites going through different vehicles, which are going into different portfolios of risk transference.
“Whilst I’m sure there will be certain elements to all of that, if there was a major loss or a series of major catastrophe losses, there might be some who might be surprised or change their strategies as a result.”