Alternative capital is ready to innovate
Alternative capital grew again last year but at a slower pace. Paul Schultz, chief executive of Aon Securities, suggests to EAIC Today this growth will continue but innovation will also be needed in the long term.
By the end of the first half of 2016, alternative capital in the re/insurance industry had reached $75 billion, and while its pace of growth has slowed compared to recent periods, it is noticeably becoming ever more intertwined and integrated with traditional re/insurance. However, experts point out that the long-term growth of alternative capital will depend on its ability to innovate.
These observations and other findings form part of Aon Securities’ recently launched annual insurance-linked securities (ILS) report. This year, the report is aptly titled Alternative Markets Find Growth Through Innovation.
The report reveals that $72 billion of alternative capital was deployed in the industry in 2015—12 percent more than a year earlier. Paul Schultz, chief executive of Aon Securities, says that while this growth is meaningful, it is somewhat lower than that of the 2014 calendar year, during which third party capital increased by 28 percent.
