Although the capital markets have been interested in insurance and reinsurance for quite some time, this interest is increasing according to Gallagher Re CEO Simon Gander.
“Capital market investment is here to stay,” he told Global Reinsurance magazine in Monte Carlo.
Gander said a lot of this had to do with the fact that the equity markets are currently “flush with capital”.
He sees sidecars becoming a more popular investment for hedge funds and private equity investors because they are simpler to set-up than a traditional reinsurance firm.
“There is no doubt that hedge funds like the ease of entry and exit,” he said. There is also more potential for shorter-term contracts, which appeals to this form of investor.
Although from a capital market's perspective, investment in insurance and reinsurance is still at the “toe in the water” stage, Gander said this is set to pick up a notch.
“The more model-orientated we get, the more comfortable these investors will become with insurance and reinsurance,” he said.
But there is a caveat on that and he emphasised that it would depend on what was going on in the rest of the world.
“I wouldn't say traditional reinsurance is on its way out,” he added, “but new solutions are available and there are other things out there which will evolve over the next few years.”
