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Execs see continued expansion of alternative capital into insurance market

Execs see continued expansion of alternative capital into insurance market

NEW YORK — Alternative capital will continue to play a role in the reinsurance space and could bring about more changes if it expands into the casualty sector, according to participants in a panel discussion during the Standard & Poor's Corp.'s annual insurance conference in New York Wednesday.

“New capital tends to go where the barriers to entry are the lowest,” Jay Fishman, chairman and CEO of the Travelers Cos. Inc. said. “Right now it's predominantly property oriented. What will be interesting to watch is people exploring casualty reinsurance.”

Panel members agreed alternative capital will likely continue to enter the reinsurance space.

“I think it's here,” said Thomas Motamed, chairman and CEO of CNA Financial Corp. “There are a lot of people who want to put their capital to work. I think its going to be around.”

For pension funds, reinsurance offers a way to diversify investments.

“As long as there is relatively little to invest in, they're going to play,” said Mike McGavick, CEO of XL Group P.L.C.

An audience poll conducted showed that a rising portion of attendees, in the mid 30% range, see alternative capital as a concern, according to Kevin Ahern, managing director and analytical manager of New York-based Standard & Poor's.