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FOR IMMEDIATE RELEASE
OLDWICK - APRIL 02, 2019 11:12 AM (EDT)
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 http://www.ambest.com/v.asp?v=costa319 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:
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AM Best is a global rating agency and information provider with a unique focus on the insurance industry.