Most industry pundits agree that alternative capital is now a permanent fixture in the reinsurance marketplace. Where there is less agreement, however, is whether more opportunistic alternative capital investors will have the intestinal fortitude to stay in the market after a major catastrophic event with large losses.

Executive Summary

Alternative reinsurance capital continues to be a hot topic at industry gatherings. A Lloyd's executive, analysts and even a solicitor weighed in on the post-event longevity of the ILS market at several recent London events.

People who assume that such capacity will disappear after a major loss are very mistaken, said Tom Bolt, director of performance management for Lloyd’s, during a panel discussion at the FT Future of Insurance event held several months ago in London by the Financial Times.

“I think there’s way more capacity that is willing to try this out,” he said. Absent a structural problem, which would make these securities and other instruments unacceptable to regulators, for example, “I think loss events alone won’t change [investors’] appetite over the long term.”

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