Bermuda's alternative capital business continues to establish itself within the global reinsurance market, with industry estimates placing Bermuda's share of total capacity at $51.9 billion - or 58 percent - of the global total of $89 billion as at December 31, 2017.
This was among the findings in the Bermuda Monetary Authority (BMA) Alternative Capital Report 2018, which found this $89 billion accounts for 15 percent of overall global reinsurance capital, up from $81 billion or 14 percent in 2016.
Collateralised reinsurance and cat bonds were the two most prevalent structures for the period ending December 31, 2017, accounting for $28.5 billion (55 percent) and $18.9 billion (36 percent) of total capacity, respectively. Sidecars accounted for 6 percent of total capacity.
Breaking down the geography of assumed risk and cedants' domiciles, the most significant exposure is in the US, representing 40 percent of aggregate exposure. This is followed by worldwide exposure, representing 38 percent.
Alternative capital vehicles on Bermuda reinsured cedants from 17 regions, with the US leading with approximately 65 percent of gross written premium at year-end 2017, followed by Bermuda (15 percent), the UK (8 percent) and Japan (4 percent).
Property catastrophe was the most prevalent line of business across risks assumed by alternative capital, representing 94 percent of GWP at year-end 2017, including property retrocession (7 percent).
BMA noted that credit surety was another significant line of business, contributing 3 percent of GWP, with mortgage reinsurance protection as a key contributor.
Excess of loss transactions were the most popular structure of risk transfer which accounted for $31.8 billion (61 percent) of aggregate exposure followed by quota share, $7.2 billion (14 percent), and stop loss, $4.8 billion (9 percent).
Bermuda Monetary Authority, Alternative Capital, Collateralised Reinsurance, Cat bond, Bermuda