ORIGINAL PUBLICATION HERE
We often discuss the efficiency of reinsurance capital sourced from capital markets, third-party or alternative sources, as well as its lower-cost nature which can allow it to have a competitive edge over the traditional reinsurance business model.
With some suggesting that the traditional catastrophe reinsurance business model is dying, others suggesting that efficient capital will take segments of the reinsurance market and make them its own, forcing unwelcome change on the markets incumbents, while still more say that low-cost reinsurance capital can out-compete the traditional reinsurer balance sheet, it’s worth looking at what this really means.