Reinsurers who have embraced alternative and insurance-linked securities are now being forced to pay for the losses they caused by selling them short. The paper also found increased use of alternative capital allowed companies to reduce the cost of reinsurers underwriting capital, reduce exposures to peak zone probable maximum losses and expand their positions with key clients.
Reinsurers who have embraced alternative and insurance-linked securities (ILS) capital are benefiting from an additional source of fee income, a diversified source of earnings revenue and the opportunity to build relationships with capital market investors, according to the latest Aon Benfield Aggregate report. The paper also found increased use of alternative capital allowed companies to reduce the cost of reinsurers underwriting capital, reduce exposures to peak zone probable maximum losses and expand their positions with key clients.