In this interview with The Insurer, Laurent Rousseau, CEO of Global Capital & Advisory and EMEA, discusses how alternative capital growth is changing "the very concept of what a reinsurer is," with those most capable of leveraging third-party capital able to achieve competitive advantage.
"The modern reinsurer is increasingly an origination, structuring and distribution platform—sourcing risk from cedents, structuring it into tranches that match different investor risk appetites and distributing those tranches into capital markets," Laurent wrote in a report this month, The Convergence of Financial and Reinsurance Capital.
To some extent, many reinsurers already have this flexibility to allocate risk to different buckets of capital, Laurent said. "It's just not to the scale that it could be, and it's not embedded completely as much as it could be embedded in the organization."
While most reinsurers have catastrophe bond funds, the report said, fewer have a broader insurance-linked securities platform and even fewer "take an approach of being a nimble risk trader."
"The question is speed, consistency, quality," Laurent said. "And this is where execution will be quite a good discriminant factor. We will see some doing it very well and some doing it less well."