Bermuda holds 58% of global alternative capital
Source: Middle East Insurance Review | Jan 2019
Alternative capital has continued its steady growth within the global reinsurance market, and Bermuda reinsurers are taking a leadership position in this business, accounting for $51.9bn or about 58% of the total capacity, according to a report by the Bermuda Monetary Authority.
While alternative capital arrangements are used in a number of ways, two structures dominated the Bermuda marketplace as at 31 December 2017: catastrophe bonds and collateralised reinsurance with $18.9bn (36%) and $28.5bn (55%) of capacity, respectively.
Industry estimates placed alternative capital at about $89bn or 15% of overall global reinsurance capital in 2017, up from $81bn or 14% of global reinsurance capital in 2016.
According to the report, assumed risks came from nine lines of business covering four major geographical regions – the US, Europe, the UK and Asia. Property catastrophe (including property retrocession) was the biggest line of business written, representing about 94% of GWP.
The US was the largest risk region, representing 40% of aggregate limits covered. Worldwide exposure was the second most significant – it accounted for approximately 38% of aggregate exposure. Bermuda’s alternative capital vehicles reinsured cedants from 17 regions. Again, the US led with approximately 65% of GWP at year-end 2017 followed by Bermuda (15%), the UK (8%) and Japan (4%). M