Capital markets usage more in 2017

A quarter of insurance and reinsurance companies say that they will use the capital markets to an increasing degree in 2017, according to data from a survey of 107 re/insurance professionals undertaken by Guy Carpenter.

The capital markets are an increasingly prevalent part of most insurers or reinsurers capital towers, with reinsurance capacity provided by capital markets investors one of the fastest growing types of protection in the marketplace in recent years.

With insurance-linked securities (ILS) capital, invested into directly collateralised reinsurance, sidecar vehicles or instruments such as catastrophe bonds and industry loss warranties (ILW’s), now amounting to somewhere between USD70 billion and USD75 billion of reinsurance capital, it appears that the growth seen in recent years is likely to continue.

Around 52 percent of re/insurance executives polled said that they would use more traditional reinsurance in 2017, while 25 percent said that they expect to use the capital markets more in 2017, while 18 percent said balance-sheet capital would be the preference and just five percent chose internal reinsurance vehicles.