Amlin-Leadenhall partnership a benefit to both
The CEO of insurance-linked securities (ILS) investment manager Leadenhall Capital Partners said its partnership with Amlin will become increasingly important at this year’s renewals, as the trend of so-called tiering in the market, whereby cedants prioritise partnerships with bigger players, becomes even more pronounced.
Amlin owns a 75 percent stake in Leadenhall. Speaking to Monte Carlo Today, Luca Albertini, CEO, Leadenhall Capital Partners, said that as insurers continue to reduce their reinsurer panels, combining capacity will be a huge benefit for both companies.
“For example, Zurich’s cutting 20 reinsurers will not affect just the Zurich panel,” he said, referring to a story run by Monte Carlo Today Day 3.
“Therefore putting our capacity together with our partner is important for us. This will also help Amlin to remain relevant.
“Capital markets players have very specific appetites, and there are a number of limitations, so being able to make an independent decision, but then create a proposal with a partner the size of Amlin, allows us to offer a solution that could cover programmes across layers.”
Albertini said the partnership allowed the company’s allocation of business in the June/July renewals to be more active than expected, but added that the investor base remained much the same.
“Our investors haven’t evolved that much over the last few years,” he said. “They are predominantly pension funds and they know the space very well and are very experienced within it.
“One thing these investors have always looked for is relative value, so one of the areas of concern has been the steep decline in reinsurance premium over the last two years. That is something that they monitor and compare to yields in other assets.”
Albertini said investors were pleased that the June/July renewals appeared stable and that a pricing floor seemed to have been found.
He added that for traditional ILS funds such as Leadenhall, interest in the funds remain stable but maybe not as strong as in previous years.
“Industry reports suggest that some of my competitors have had a reduction of their assets under management and cat bond funds have suffered reductions. While there may be a net out for some, we’re still receiving money from new investors,” he said.
Speaking of the Rendez-Vous, Albertini said that compared with previous years, the first topic of conversation has not led directly to rates going down, but more to the impact of retentions.
“Articles about insurers reducing their reinsurance panels are more important in this Monte Carlo, and some painful choices will be made on insurance panels, but that won’t necessarily drive prices down that much,” he said.
