ABR Re deal is the first of many: KPMG
Primary players are dealing directly with sources of alternative capital as they seek to create lasting relationships.
Speaking to Intelligent Insurer, Jason Carne, partner at KPMG Bermuda, said that this interest, driven by price and the availability of capital, is manifesting itself in a number of ways, most recently through ACE’s ABR Re vehicle.
In this arrangement, the insurer has formed an internal reinsurance vehicle, capitalised by alternative capital, which will manage a portion of its ceded premium.
“The vehicle is quite indicative of what we’re starting to see and we will see more of these types of transactions,” he said.
ACE has an equity position within the vehicle, allowing the insurer to make money through the investment side and if the vehicle goes to an initial public offering (IPO).
Carne also spoke of the hedge fund reinsurer model. He said that there is already evidence of this set-up starting to evolve.
“The model is migrating a little, and we’re starting to see the formation driven more by the insurance companies, which are partnering with the hedge funds. When the insurance company drives it, they’re able to bring their premium flow to the table,” he said.
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