Alternative capital for reinsurers rises to $44B

In the Euro zone, Moody’s is forecasting a negative GDP growth in 2013 of zero to a negative one percent; and then zero to one percent positive growth in 2013.

“These figures reflect a still difficult macroeconomic environment, which inherently constrains the growth of primary insurers and, in turn, suppresses demand for reinsurance. While downside risk remains, the slowly improving economic environment in the U.S. and Europe presents a manageable operating environment for reinsurers.” What follows is Moody’s estimated alternative reinsurance capacity in June 2012 and April 2013.

“What began with a trickle of capacity more than fifteen years ago has turned into a flood of capital entering the reinsurance market from institutional investors in the form of catastrophic bonds, collateralized reinsurance vehicles and industry loss warranty contracts,” the report states. The survey adds that the $44 billion in alternative capital now accounts for about 15 percent of the global property catastrophe reinsurance limit placed.