Press Release - APRIL 02, 2019

AM BestTV: ILS Investors Become Cagier After Recent Catastrophe Losses, Says AM Best Senior Financial Analyst

 Lee McDonald
Group Vice President, Publication and News Services
+1 908 439 2200, ext. 5561


OLDWICK - APRIL 02, 2019
In this episode of AM BestTV, Mariza Costa, senior financial analyst, AM Best, said reinsurance losses in 2017 and 2018 broke a pattern of more regular returns and also stemmed events that were not as well modeled as more traditional perils. Click on to view the entire program.

Presently, third-party capital is estimated to be about $95 billion and growing. Costa addressed the issue on how high it could possibly reach.

“Overall, AM Best believes third-party capital will continue to grow, as well as be a big part of the reinsurance market going forward,” said Costa. “AM Best thinks that given the losses of 2017 and 2018, it will decline a little bit in 2019, just because of the trapped capital that is in some of these funds to pay for these losses and some investors are not willing to replenish that capital.”

Costa also addressed how traditional reinsurers are using their third-party capital.

“There has been a flux of merger and acquisition activities, as some of the traditional reinsurers are embracing third-party capital. There is a convergence of this capital in the market, and we think it will continue. It has become a way for traditional reinsurers to lower their own cost of capital if they can partner with this type of third-party capital, as it frees up their balance sheet risk. Additionally, they can make free income if they underwrite those risks for these investors,” she said.

Recent episodes of AM BestTV include:

  • Spanish Insurers Turn to Technology to Enhance, Reach and Control Costs, Says Senior Financial Analyst: Jessica Botelho, senior financial analyst, AM Best, said insurers in Spain are using technology to combat limited growth opportunities in domestic markets and political risk in Latin America: .

  • Converging Forces Drive Mergers &Acquisitions for Insurers in CIS Region, Says AM Best Senior Financial Analyst: Valeria Ermakova, senior financial analyst, AM Best, said business costs, bank consolidation and increased regulatory scrutiny have furthered mergers and acquisitions among insurers in the Commonwealth of Independent States: .

  • Insurers in Western Europe Look to Mergers and Acquisitions for Growth, Says AM Best Managing Director: Greg Carter, managing director, analytics, AM Best, said most rated insurers in Western Europe carry a stable outlook, but face challenges to grow faster than the mature markets they serve: .

  • Blockchain Already a Presence in Captive Insurance Sector, Says Captive Panel: A panel of captive insurance experts at the Captive Insurance Companies Association (CICA) 2019 International Conference, discuss the ways blockchain technology potentially can help companies better manage captive-insured risks: .

AM BestTV covers exclusive AM Best and insurance industry information and reports, targeted topics and key developments in the insurance, reinsurance and related sectors daily. Sign up for alerts of episodes at . View AM BestTV episodes at .

AM Best is a global rating agency and information provider with a unique focus on the insurance industry.