Alternative capital in the reinsurance sector stands at about $89 billion, or about 15% of overall global reinsurance capital as of Dec. 31, 2017, up from $81 billion in 2016, according to a report Friday from the Bermuda Monetary Authority.
The Bermuda market “maintained a significant share in the global alternative capital business during 2017,” the BMA said, with Bermuda’s share of alternative capacity at $51.9B, or about 58% of the global alternative capital market.
Just over half of that market, 55%, consists of collateralized reinsurance, with 36% in catastrophe bonds, 6% in sidecars and 3% in “other,” the report said.
The Bermuda market’s alternative capital reinsured cedents from 17 regions, led by the U.S. with about 65% of gross written premium at year-end 2017, followed by Bermuda with 15%, the UK at 8% and Japan at 4%.
Property/casualty catastrophe made up 87% of the market, with property retrocession at 7%, other at 4% and credit/surety at 3%.
In its captives report, the BMA said financial institutions represent the largest group of parent companies at 16%, followed by shipping, transport and storage at 12% and automotive, manufacturing and retail at 11%.
New formations, however, were led by the automotive, manufacturing and retail group at 50%, followed by financial institutions at 25%, education at 13%, and energy, power and utilities at 12%, the BMA said.
Financial institutions continued to lead in premiums, although share slipped to 46% in 2017 from 54% in 2016. Shipping, transport and storage’s share increased to 12% in 2017 from 11% in 2016, and energy, power and utilities’ share rose to 7% from 5%, BMA data showed.
Insurance-linked securities are a growing part of the alternative risk transfer universe as primary policyholders set up structures to access the market, which also benefited from a strong showing after the 2017 catastrophe season, observers say.