Powered by: C ARLO TTOuesday DSeptemAber 12Y, 2017
Schroders launches ILS
life fund; Lohmann mulls
effect of buffer clauses
Asset manager Schroders is close to fully launching
a new fund dedicated to life insurance-linked
securities (ILS), according to industry veteran
Dirk Lohmann, the CEO of Secquaero, the fund
manager 50.1 percent-owned by Schroders.
The fund and mandates being launched are
Schroder funds managed by Schroders. Secquaero
will be Schroders’ exclusive adviser on ILS
Lohmann said the fund has commitments
from a number of investors and some deals in the
pipeline. He expects the fund to be up and running
by the end of October.
He believes demand for this form of risk
transfer is growing as large insurers and banks with
sizeable books of this long-tail risk on their book
seek to monetise the future value of such blocks of
business now and free up capital.
Such is the size and complexity of many of
these deals, only a small number of the biggest
reinsurers currently participate in this market.
And some of these players are increasingly wary
of taking too much of a concentration of this risk.
(Continued top of page 6)
Bermuda:Re+ILS Roundtable p20
Time to shine after the
storms have passed
Third party capital likely
to dampen pricing peaks:
Axis CEO Benchimol
The proliferation of sidecars, re/insurance
funds and other instruments that enable
capital markets investors to easily invest in risk
transfer will dampen potential peaks in pricing
following big losses—but that does not mean
that prices will not rise.
That is the view of Albert Benchimol, chief
executive of Axis Capital, who was speaking
to Monte Carlo Today as Hurricane Irma
approached Florida. He stressed that while the
abundance of such vehicles in the industry will
affect the dynamic around pricing, they will not
change the fundamental principles behind the
industry’s cyclical nature.
“Pricing follows losses in reinsurance; in
a period of low claims levels, prices fall and
when claims increase, they rise,” he said.
“The pace and extent to which prices change
is a function of the amount of capital in the
industry. If capital is low, they will rise quickly
and decrease slowly as companies recover
balance sheet strength. If the industry is
capital rich, prices will be slower to rise and
faster to decrease again.”
He stressed that losses stemming from this
hurricane season will add to growing claims
levels in other areas of the industry including
areas of the casualty side such as D&O. On this
basis, he expects that prices should increase;
Harvey and Irma will cause buyers to rethink strategies
As losses stemming from hurricanes
Harvey and Irma become clearer in the
coming weeks and months, buyers will be
reevaluating the nature and value of some of
the reinsurance structures they’re purchasing,
Charles Goldie, CEO of worldwide specialty
at PartnerRe, told Monte Carlo Today.
He believes that, driven partly by the
proliferation of more third party capital, some
buyers have bought more aggregate coverage
and what he calls “one-shot deals”.
But many insurers needed more time to
establish what their final losses will be from
the first storm. They were then forced to make
decisions about whether to buy more coverage
or whether they were comfortable with their
existing programmes, without really knowing
where they stood.
“An interesting thing that will come out of
Harvey and certainly Irma—regardless of the size
of Irma—is that buyers will be thinking a little bit
more about what they’ve purchased,” Goldie said.
“Whether or not Irma creates a big claim, it’s a
wake-up call to the (Continued bottom of page 2)
the extent and timing of how that happens
that remain to be seen and could depend on
investors’ appetite to reinvest in the industry
using these vehicles.
“The fact is the industry has many of these
vehicles already in place to write business,”
Benchimol said. “Rather than form new
companies, as used (Continued top of page 2)
THE FUTURE OF FARMING?
JUST ADD A LOT MORE WATER.