james-nash_guy-carpenter
James Nash, president, international, Guy Carpenter
9 September 2018 News

Buyers watchful of new reinsurance owners’ strategies

Buyers will be watching the continued consolidation in the market with close interest as they assess how their mixture of counterparties might change as a result, and whether some of the new owners of reinsurers intend to change their strategy and risk appetite in any way, James Nash, president, international, Guy Carpenter, told Monte Carlo Today.

Nash stressed that he does not expect too much direct disruption from the significant deals announced already this year to the negotiations in Monte Carlo, although he suggested that the Rendez-Vous rumour mill is also likely to throw up new possible combinations of reinsurers and strategic buyers.

“The mix of counterparties is something insurers will be looking closely at. That is changing as is the leverage in the reinsurance market, particularly in catastrophe lines of business,” he said.

“Cedants will be examining where the ultimate risk lies and also the amount of leverage in the market, which is generally increasing as a result of the way alternative capital operates, notably the increase in sidecar capacity over the last two years.”

He added that while the general consensus is that alternative capital passed the first test thrown at it in 2017 with flying colours, he expects that the business model will continue to evolve.

“It passed one test, but one swallow does not prove a summer. There will be sterner tests; the essence of the business model has not been thoroughly stressed yet.”

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