ORIGINAL PUBLICATION HERE
Around twenty years into the convergence of reinsurance and capital markets there is a feeling that the trend is still in its infancy, with the direct connection of capital from institutional and increasingly more private investors to risk having a long future ahead.
The trend, of connecting investor capital to risk, really began much longer ago, of course, with investors capitalising Lloyd’s of London underwriting vehicles, however it is the fully-collateralised nature of the insurance-linked securities (ILS) market that has seen the wave of interest increase dramatically over recent years.
Around 20 years ago the first catastrophe bonds and similar transactions came to market, as the capital markets found it could securitise risk into a liquid, transferable form, which was assumed to be the most appropriate for an institutional investor.