Current State: Catastrophe Bonds and Alternative Markets

Re/insurance companies continue to benefit from a flow of new capital primarily driven by investments in insurance-linked securities (ILS), sidecars, hedge fund-backed reinsurance companies and collateralized reinsurance vehicles, chiefly by means of catastrophe bonds issuance. Catastrophe bonds and other ILS have provided new sources of risk capital where traditional reinsurance markets were not positioned to provide new capacity demands or increase commitments for existing reinsurance contracts.

Insurers and public sector reinsurance buyers benefit by favorable pricing due to the increase of catastrophe capacity from reinsurers. In addition, there’s a strong pipeline of potential new reinsurers taking advantage of the streamlined issuance process providing insurers and public sector a larger and diversified pool of reinsurance providers.

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