AM BestTV: Insurance-Linked Securities Investors Become Cagier After Recent Catastrophe Losses, Says AM Best Senior Financial Analyst
2019 APR 16 (NewsRx) -- By a
Presently, third-party capital is estimated to be about
“Overall, AM Best believes third-party capital will continue to grow, as well as be a big part of the reinsurance market going forward,” said Costa. “AM Best thinks that given the losses of 2017 and 2018, it will decline a little bit in 2019, just because of the trapped capital that is in some of these funds to pay for these losses and some investors are not willing to replenish that capital.”
Costa also addressed how traditional reinsurers are using their third-party capital.
“There has been a flux of merger and acquisition activities, as some of the traditional reinsurers are embracing third-party capital. There is a convergence of this capital in the market, and we think it will continue. It has become a way for traditional reinsurers to lower their own cost of capital if they can partner with this type of third-party capital, as it frees up their balance sheet risk. Additionally, they can make free income if they underwrite those risks for these investors,” she said.
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