Alternative capital flow into reinsurance market slows
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MONTE CARLO, Monaco — Alternative capital continues to flow into the reinsurance market, but the pace of that influx has slowed, according to JLT Re, the reinsurance brokerage arm of Jardine Lloyd Thompson Group P.L.C.
Speaking during the Rendez-Vous de Septembre reinsurance meeting in Monte Carlo, Monaco Monday, David Flandro, head of analytics at JLT Re, said that alternative capital is “here to stay” but that “it is a normal investment cycle,” and some investors will withdraw if returns are better elsewhere.
Catastrophe bond yields have fallen since 2012, said Mike Reynolds, JLT Re CEO.
“It is still attractive (for investors), just not so attractive,” he said.
“We think the market is rational, and the rate of growth is going to moderate,” he said.
A combination of three factors means that the reinsurance market may be reaching an inflexion point whereby the market will stabilize, said Mr. Flandro.
The reducing speed of entry of new capital into the sector is one of those factors, he said.
Increased merger and acquisition activity among reinsurers also may mean the overall capital in the industry reduces somewhat, he said.
And at the mid-year renewals, rates decreased at a slower rate than in previous renewals, he said.
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