Still, the holy grail for a reinsurer is to find a harmonious mix of capital, where both alternative and balance-sheet can be used most effectively, with both generating profitable returns for their respective investors and for the reinsurer itself. Companies who have acquired alternative and insurance - linked securities ( ILS ) capital are benefiting from an additional source of premium income , a diversified source of premium revenue and the opportunity to build relationships with capital market investors , according to the latest Aon Benfield research report . The paper also found increased use of alternative capital allowed companies to reduce the cost of reinsurers ' capital , reduce exposures to peak zone probable maximum losses and strengthen their positions with key clients .
Companies who have acquired alternative and insurance - linked securities ( ILS ) capital are benefiting from an additional source of premium income , a diversified source of premium revenue and the opportunity to build relationships with capital market investors , according to the latest Aon Benfield research report . The paper also found increased use of alternative capital allowed companies to reduce the cost of reinsurers ' capital , reduce exposures to peak zone probable maximum losses and strengthen their positions with key clients .