Guy Carpenter partners on venture focused on non-cat ILS

Vario Partners, an insurance analysis and modelling firm, and Guy Carpenter, have unveiled a new joint venture that will structure and placenon-catastrophe insurance linked securities (ILS).

Vario Global Capital will serve the increasing appetite amongst sophisticated long-term investors to invest in the non-catastrophe exposed insurance risks of property and casualty insurers, delivered through new capital market solutions, the founders said.

For property and casualty insurers, the venture will provide consistent access to capital markets funding for non-catastrophe risk portfolios, through single class, multi-class, and whole account transactions, with the intention of raising its own dedicated fund over time to directly participate in such arrangements.

This is increasingly attractive to insurers, as it allows them to reduce their overall cost of capital, delivering greater capital efficiency and improved returns on equity, the partners said.

James McPherson, one of Vario Partners founding partners and a director of Vario Global Capital, said: “Our strength lies in a new, proprietary modelling approach which allows us to structure and analyse non-peak risks, and even whole insurance portfolios, to deliver reliable return projections for investors. The technology opens an entirely new area of insurance risk to institutional investment.”

Eric Paire, head of Strategic Advisory, EMEA, Guy Carpenter and director of Vario Global Capital, added: “We anticipate significant demand, particularly in non-peak risk lines, for the simplified access to the capital markets that Vario Global Capital will deliver.

“This initiative will offer our clients new and exciting solutions, and further extend Guy Carpenter’s leadership in the wider capital advisory and ILS spaces.”

Nick Frankland, CEO of Guy Carpenter’s EMEA Operations and director of Vario Global Capital, added: “We are very excited about this new partnership with such proven professionals, and believe that delivering improved capital efficiency to insurers through the ILS market has the potential to transform the future shape of reinsurance buying for the insurance industry.”