5 November 2013ILS

New SPIs will write $7 billion premium in 5 yrs

According to statistics from the BMA, the 29 SPIs registered in 2013 have anticipated premiums of just under $970 million and will write more than $7 billion over the next five years.

This is in turn challenging the role that reinsurers have traditionally played, says Greg Wojciechowski, president of the Bermuda Stock Exchange. He said that the $30 trillion pension fund industry has grown increasingly comfortable with investing in cat risk, particularly as they struggle to make decent returns elsewhere in the investment universe.

The rise and rise of third party capital has led to a ‘coming of age moment’ for the sector, according to Goldman Sachs, one that inextricably ties re/insurance to the capital markets, he explained.

Wojciechowski said that Guy Carpenter had reported a record $10 billion of institutional investor capital has flowed into the ILS market over the past eighteen months, much of it heading for Bermuda. Convergence capital now comprises more than 14 percent of total global property catastrophe limit purchased.

Bermuda’s growing role is evident in the value of listings on the Bermuda Stock Exchange (BSX), said Wojciechowski and by the number of special purpose insurers (SPIs) now on the Island. The BSX now hosts more than $8.5 billion of ILS listings, while Bermuda SPIs reached 83 by the end of August this year.