The alternative reinsurance market is on steroids, bulking up to represent an estimated 12 percent of the global reinsurance market, according to estimates from Aon Benfield. This may seem like a paltry slice of the business, but it is more than double the alternative market’s share of five years ago and triple the size from 2008. Most notably, the alternative market’s expansion far surpasses the growth in traditional reinsurance capital.

Executive Summary

Capacity shortages and perceived investor opportunities will drive the development of new alternative capital markets.

While this capital has almost exclusively been focused on augmenting property-catastrophe reinsurance capacity, such spectacular progress begs the question of whether other reinsurance lines might benefit by insurance-linked securities (ILS), collateralized reinsurance, sidecars and other novel risk transfer arrangements to investors.

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