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In a development that is eliciting some mixed feelings, some $35 billion in capital has recently entered the reinsurance market from hedge funds and pension funds. Soom see it as a boon for reinsurance clients, but others remain cautious.

By Bonnie Cavanaugh, E&S Editor | Updated on May 01, 2013

In a development that is eliciting some mixed feelings, some $35 billion in capital has recently entered the reinsurance market from hedge funds and pension funds, both nontraditional sources. And while Aon Benfield sees this surplus of capital as a boon for reinsurance clients, Willis Re has been decidedly cautious. Both reinsurers issued market outlook reports to coincide with April 1 renewals.

Aon Benfield’s Reinsurance Market Outlook notes this new capital coming into the insurance-linked securities (ILS) and collateralized reinsurance market gave some of its clients risk-adjusted pricing decreases of 25 percent to 70 percent in U.S. hurricane and earthquake exposed areas—the lowest ILS costs of reinsurance for peak perils since 1992’s Hurricane Andrew. The company says it expects to see “continuing material benefit for clients” as it looks forward to June and July renewals.

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