In this episode of Mercer’s Critical Thinking podcast, David Morrow, Global Insurance Proposition Leader at Mercer, is joined by Laurent Rousseau, CEO of Global Capital & Advisory, and Europe and IMEA for Guy Carpenter, and Eryn Bacewich, Head of Insurance Solutions within Mercer’s insurance investment practice, to discuss the evolving role of alternative capital in the reinsurance market.
“Since the early 2000s, financial investors have actually realized that there would be a different way to back insurance risks than by putting in hard capital and an offshore center,” Laurent explained.
“So, what we have seen, and really talking off in the early 2000s, is financial investors looking at natural perils as a source of diversified risks. So, the catastrophe bond market really started taking off in these early-2000s years, and really became a key part of the reinsurance industry since,” he continued. “Since the mid-2010s, we have seen the growth of a different sort of market – not as liquid, far less catastrophe exposed, and much closer to insurance risks, with what I’d call sidecars or more ground-up insurance vehicles.”