March 2014/1

The new generation of casualty reinsurers backed by asset managers potentially offer a broader proposition than previous hedge fund initiatives. But they must be able to demonstrate long-term commitment to win over buyers, says Andrew Newman, head of casualty at Willis Re.

Fermat Capital co-founder John Seo said that the cat bond product has developed to "Generation 1.5" as investors take on more complex risk, but it can still progress to the "Gen 2" level.

A panel of state reinsurance buyers said at the Sifma ILS conference held in New York this month that price is not always the driver that leads them to the alternative reinsurance markets.

Catastrophe bonds are not suited to covering flood risk because of modelling issues, inadequate pricing and opaque information about the peril, according to Credit Suisse senior ILS underwriter Rajiv Punja.

Panellists at the Sifma ILS conference questioned whether moving the cat bond market to a multi-model viewpoint is achievable, as they argued that the securities market should remain open to investors without underwriting expertise.

AM Best is receiving enquiries at least once a month from asset managers interested in setting up a rated reinsurer, analysts Steven Chirico and Nick Dranchak told Trading Risk.

Selective Insurance added $100mn of cover to the top of its reinsurance programme for 2014 as the firm said that almost 30 percent of the limit was written on a collateralised basis.

Allstate is considering making the top layer of its reinsurance programme a fully collateralised one-shot cover when it renews on 1 June, sister publication The Insurance Insider has reported.

The California Earthquake Authority (CEA) placed $1.1bn of limit in the 1 January renewals, including $504mn on a two-year basis, according to documents presented at a board meeting in late February.

If Japanese mutual insurer Zenkyoren places more reinsurance limit in the 1 April renewals the additional limit could be seen as "fair game" for alternative providers in a market that has tended to favour traditional relationships, sources said.

Allied World lifts commitment to Aeolus; Blackstone keeps cat bond portfolio stable; Twelve issues second Dodeka; TransRe builds on Pangaea; Kinesis draw-down; Axis Ventures raises $50mn

Amlin plans to focus on increasing "synergies" with its associate ILS fund manager Leadenhall Capital Partners this year as it prepares to increase its stake in the firm above 40 percent or fully buy out management.