Posts Tagged ‘sidecars’



September 16th, 2014

Capital Markets Growth and Innovations Continue

Posted at 1:00 AM ET

cory-anger-small2-169 Cory Anger, Global Head of ILS Structuring, GC Securities

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The influx of new capital into the (re)insurance industry constitutes the largest change to the sector’s capital structure in recent memory. Over the past 24 months, approximately USD20 billion of new capital has entered the market through investments in insurance-linked securities (ILS), funds and sidecars as well as the formation of hedge fund-related reinsurance companies and collateralized reinsurance vehicles.

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March 13th, 2014

Catastrophe Bond Outlook for 2014

Posted at 1:00 AM ET

The growing influence of alternative markets capacity is pressuring traditional reinsurers’ business model and challenging them to compete against a model with lower-cost of capital that continues to enter the reinsurance market. Most reinsurance companies have responded to the challenge by leveraging their incumbent status on reinsurance programs, offering similar or better terms and similar or reduced pricing. Particularly, traditional players are emphasizing their ability to efficiently provide reinstatements, which are seen by many as a critical part of core reinsurance programs, particularly for working reinsurance layers. Traditional players are also hedging their bets and creating their own capital markets divisions to attract, manage and utilize capital from third-party sources whether in the form of fund management, managed accounts or sidecars. This will allow reinsurers the opportunity to securitize the most capital-intensive parts of the business while providing valuable cost-efficient capacity in other business lines.

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August 9th, 2012

Chart: Non-Traditional Market Capacity in the Property Catastrophe Risk Transfer Market

Posted at 1:00 AM ET

It is worth noting that while the 144A catastrophe bond* market is the most visible component of direct capital markets capacity in the catastrophe risk market, it is not the largest. Other conduits, particularly collateralized reinsurance and sidecar participations are also meaningful as additional sources of risk transfer capacity.

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July 12th, 2011

Focus on Hurricane Season at July 1, 2011 Reinsurance Renewal: Property Retrocession

Posted at 1:00 AM ET

The run up to July 1 is not traditionally a big renewal period for catastrophe retrocession. It is more about new and opportunistic purchases, as clients look to mitigate the effects of the coming US wind season as best they can. However, it is precisely because of this renewal date’s proximity to the wind season that deals purchased at this time tend to be an important indicator of pricing direction and activity. We have observed that activity within the sector has continued the trend towards rate rises (on both loss-affected programs, and, to a lesser extent, loss-free programs). This activity has been mainly driven by industry loss warranty (ILW) and county weighted industry loss (CWIL) purchases. It must be viewed against a background of significant tornado activity and flooding in parts of the United States and the latest earthquake in New Zealand in June.

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October 28th, 2008

Capital Drought on the Horizon?

Posted at 8:59 AM ET

David Priebe, Chairman of Global Client Development
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Earlier this year, the (re)insurance industry celebrated an abundance of capital. Buybacks and dividends were common, as carriers struggled to find productive uses for their extra cash. Only a few months later, we are in the midst of a financial catastrophe that is wreaking havoc on balance sheets and constraining carrier access to capital. And, the situation could worsen. A major catastrophe event could place substantial demands on (re)insurer capital in a climate where replenishment would be both time-consuming and costly.

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October 24th, 2008

The Week’s Top Stories: Oct 20 - 24, 2008

Posted at 2:00 AM ET

Cat Risk Comes Out of Hiding: advances in casualty catastrophe modeling may help protect you from “hidden” portfolio exposures.

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Sidecars Have a Specific Role to Play: low overhead and an inherent exit strategy are likely to help these vehicles regain prominence in the next hard market.

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FHCF Bonding Capacity Update: new estimates reflect the changes in the economic climate and emphasize the heavy dependence of the FHCF on post-event financing to meet its obligations.

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Push Pandemic Out of Insurance: the depth and flexibility of capital markets may provide a robust alternative to traditional reinsurance.

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Looking at a Downturn?: fears of a mega-catastrophe and pressure from broader economic conditions should keep underwriters from assuming inadequately priced risk.

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Most Popular Keyword: alternative investment

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Clashing Conventions: Measuring and Managing Exposure: by triangulating among workers compensation, convention, and venue databases, the measurement of convention clash risk is becoming a reality.

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October 19th, 2008

Sidecars Have a Specific Role to Play

Posted at 6:37 PM ET

Christopher Klein, Global Head of Business Intelligence
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The popularity of sidecars seems to have ended. The availability of traditional capital and access to insurance-linked securities (ILS) and other alternatives simply has made sidecars less attractive. But, reinsurers know that the market can harden at any time, with one mega-catastrophe creating near-immediate demand for fresh capital. Low overhead and an inherent exit strategy are likely to help these vehicles regain prominence in the next hard market—with investors and reinsurers alike.

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October 1st, 2008

Navigating Pricing Peaks and Valleys

Posted at 6:11 PM ET

By David Priebe, Chairman, Global Client Development
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The capital models for (re)insurance risks are evolving. Over the past 15 years, alternative sources of capital have become increasingly important, particularly in the capital-constrained environments that follow major catastrophe events. As expected, capital market vehicles such as catastrophe bonds and sidecars have brought additional capacity to risk-bearers when they need it most, alleviating price pressure as a result.*

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September 8th, 2008

A Sidecar Comeback?*

Posted at 2:05 PM ET

David Priebe, Chairman of Global Client Development
Contact

High-velocity capital was crucial in 2005 and 2006. Hurricanes Katrina, Rita, and Wilma struck with unexpected consequences, and (re)insurers were left with a USD34 billion price tag. Balance sheets were drained, and the hunger for fresh capital was universal. Some replenishment did come from the dedicated capital of traditional reinsurance companies, but for the first time, alternative sources were prominent and accounted for a third of the cash coming into the industry. Sidecars effectively made their large-scale debut at this time, funneling USD13 billion onto carrier balance sheets.

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