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Bermuda's Leaders Part II - Service Providers & ILS Specialists 2016

What will be the main areas of growth for the Island’s risk transfer market? There has been quite a bit of discussion recently regarding the gap between economic and insured losses, and a number of those exposures, such as flood and earthquake, are right in Bermuda’s wheelhouse, so I anticipate Bermuda being at the forefront in proffering innovative solutions to these underinsured portions of the world economy.  What are the main challenges you see ahead? One goal that has been floated is creating a truly liquid market in ‘tradable’ reinsurance risk, which would provide maximum capital efficiency to reinsurers. But, in my view, truly achieving this will require a level of standardisation similar to that which Fannie Mae created in the mortgage market in the early 1980s; the mortgage-backed securities (MBS) market has evolved to the point that the interest rates charged to borrowers are based on the yields at which MBS trade in the capital markets, and originators of that mortgage risk price-in their desired margin and fees for administering the mortgages when setting prices the borrowers pay. The level of standardisation necessary for a truly liquid market to allow reinsurer/originators to achieve that holy grail in capital efficiency do not yet exist in our market. Are there any other leaders you particularly admire for what they have done to help propel Bermuda to prominence as a risk transfer hub? In conceptualising Top Layer Re and DaVinci Re, Jim Stanard, Bill Riker and Jay Nichols created the basis for the massive third-party capital infusion into the property cat reinsurance industry that we’ve witnessed over the past dozen years. When Arch co-sponsored Watford it adapted the best of these, as well as innovative new mechanisms, into the ongoing Arch-Watford relationship. On the pure fund side, Frank Majors and Greg Hagood created the first fund access point for investors and do a good job of tailoring risk:return profiles to investor appetite. BERMUDA’S LEADERS PART II Laurence Richardson joined Arch Capital Group in early 2012 as senior vice president–capital markets, a position in which he primarily focuses on convergence transactions through which reinsurance risk is transferred to capital markets investors. Prior to joining Arch, Richardson held the position of senior vice president in the ventures group at RenaissanceRe, which develops and structures non-traditional reinsurance products, makes strategic investments and creates and manages RenRe’s joint ventures and other managed vehicles. Richardson joined RenaissanceRe in mid-2001. Richardson was an investment banker with over 15 years of experience in the structured products and securitisation arena, having been employed at a number of nationally-recognised Wall Street firms. He graduated from the University of Virginia with a BS in commerce and a Juris Doctor degree. Do you believe Bermuda will remain a risk transfer hub? I’m confident that with all of the intellectual horsepower and creativity we have in Bermuda, the Island will continue to be a leader in identifying and structuring risk transfer products to assume the exposures that clients would like to cover. How do you anticipate Bermuda will continue to adapt and evolve? Property cat is one of the most volatile lines of business, but given the increasing comfort that institutional investors have with the vendor cat models, and that cat risk is uncorrelated with these investors’ bond and equity portfolios, this is an attractive risk for them to assume, and I’m confident that the vehicles through which cat exposure is ceded to investors will continue to evolve. “I’m confident that the vehicles through which cat exposure is ceded to investors Laurence Richardson will continue to evolve.” Job title: Chief operating officer Company: Watford Holdings 39 2016 Bermuda:Re/insurance+ILS


Bermuda's Leaders Part II - Service Providers & ILS Specialists 2016
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