The participation of the capital markets in the property-catastrophe reinsurance industry is poised to explode beyond one-third of the total limits in the market, an industry executive said recently.

Executive Summary

The participation of the capital markets in the property-catastrophe reinsurance industry is poised to explode beyond one-third of the total limits in the market, Aspen's CEO Christopher O'Kane predicted at the S&P Annual Insurance Conference recently, where alternative reinsurance capital was one of the hot topics discussed by industry leaders.

Reacting to the 33 percent guesstimate supplied by an analyst in the audience of Standard & Poor’s Annual Insurance Conference last week, Christopher O’Kane, chief executive officer of Aspen Insurance Holdings Limited, posed his own question to the analyst, who said that the number has been proposed by industry experts.

“Why would it stop at 30 percent?”

“If you have expensive money and cheap money, cheap money will win,” O’Kane said during a reinsurance CEO panel. “If there are traditional reinsurers saying they want to make a 12 or 14 percent return on capital, and there are people perfectly content at 5, 6 or 7 percent, then there’s a lot of room” for the lower-priced offerings to grow.

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