January 28th, 2014

Chart: Pension Fund Capital Under Management and Allocations into Reinsurance

Posted at 1:00 AM ET

As the illustration below shows, pension funds alone are worth around USD30 trillion. Based on Guy Carpenter’s analysis of possible capital allocation percentages to the (re)insurance space in consultation with sector experts,a maximum of USD900 billion of this amount could potentially be available for insurance-linked investments. This figure is, of course, much greater than currently needed, demonstrating the existing convergence-driven supply excess. Given Guy Carpenter estimates global property catastrophe limit is currently in excess of USD300 billion, and the ILS market only accounts for around 15 percent of this amount, pension funds have so far made very small investments in reinsurance relative to their overall size.

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