Monday, April 25, 2016

Alt Capital In The Reinsurance Space Hits $70 Billion

No wonder no one can make any money.
From Artemis, April 22:
Alternative reinsurance capital growth outpaced traditional reinsurance in 2015, increasing 21% to reach $70 billion. A decline in traditional reinsurance capacity was offset by continued expansion of ILS, helping total reinsurance capital grow to $427 billion, according to Willis Re.

Alternative, or third-party reinsurance capital continues to have a greater influence on the overall reinsurance landscape, ending 2015 at $70 billion, which is $15 billion, or 21% higher than at the end of 2014.

During the same period traditional capital dedicated to reinsurance declined by a reported $13 billion, or 3.5% ending 2015 at $357 billion, compared with $370 billion a year earlier, says Willis Re.
The decline in traditional reinsurance capacity combined with the increase in alternative reinsurance capital saw overall capital dedicated to reinsurance at the end of 2015 total $427 billion, a 0.5% increased when compared with the end of 2014 ($425 billion), says Willis Re.

According to Willis Re’s numbers, alternative reinsurance capital’s share of the overall reinsurance market stood at 16.4% at the end of 2015, compared with 13% a year earlier, so a roughly 3.4% increase.

This highlights how third-party reinsurance capital continues to grow its influence in the reinsurance landscape, expanding its presence and contributing a larger portion of total, dedicated reinsurance capital.

“Reinsurers continue to face a myriad of headwinds placing downward pressure on underlying results. However, headline figures remain robust and capital positions are strong – the dual saviours of reserve releases and low severity loss experience continue to underpin reported results,” said Global Chief Executive Officer (CEO) of Willis Re, John Cavanagh.

“Yet underlying RoEs are now beginning to breach minimum target thresholds. The pressure persists with capital remaining at record levels amidst the continued influx of capital from non-traditional sources,” added Cavanagh....MORE