ILS investors follow TMR in Asia
As Tokio Millennium Re (TMR) deploys its services and market propositions in the Asia-Pacific region, its insurance-linked securities (ILS) partners are following in its wake—at least in areas where there is sufficient quality of data and reliable risk models, TMR chief executive officer Stephan Ruoff told SIRC Today.
Alternative reinsurance capital has been slower to spread across Asia-Pacific than for example in North America because of a lack of tried and tested models and reliable historical data on risks.
In Australia and Japan ILS has started to develop strong penetration and to some extent also in New Zealand, Ruoff said.
TMR has been expanding particularly in more mature markets in Asia-Pacific as model and data availability there allow it to quantify the risk more accurately .
TMR’s strongholds are in Australia and New Zealand—the reinsurer does not write business in Japan as it is owned by a Japanese group. Its Asian portfolio is mostly situated in Korea, Taiwan and China, with smaller portfolios in south-east Asia and India.
Model availability and the degree of sophistication of models has helped ILS markets to access these areas, Ruoff explained.
Singapore has been looking to push into the ILS space by providing an attractive regulatory framework and environment, he added.
While it may be more difficult for ILS to spread in less mature markets and regions with low insurance penetration, cat bond solutions in the form of public-private partnerships can be deployed there, Ruoff said.
Partnerships between for example the World Bank, governments, and private capital providers can be an option to develop solutions that offer more comprehensive protection against the impact of catastrophes such as typhoons and earthquakes.
“These solutions attract capital markets, widening the capital pool beyond the traditional reinsurance capacity. Such structures also provide transparency while offering protection to the countries’ development and an increase in insurance penetration,” Ruoff explained.
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