Alternative capital a key risk for traditional reinsurance
Wednesday, 06 03 2015, Category: Insurance and Reinsurance, Country: Europe
For the traditional reinsurance market the competition from alternative sources of capital, such as third-party institutional investors and insurance-linked securities (ILS) funds, is a “key risk”, according to EIOPA.
The EU insurance and reinsurance industry watchdog, the European Insurance and Occupational Pensions Authority (EIOPA), refers to the threat that the growth of ILS and alternative capital poses to traditional reinsurers in its latest Financial Stability report.
The report discusses the difficult macroeconomic environment, which is pressuring insurance, reinsurance and pension business models. The low-yield investment environment, threats created by quantitative easing (QE), as well as credit risks are all cited as threats to all sectors, while alternative capital is cited as a key risk to reinsurance business models.