Artemis Live - Insurance-linked securities (ILS), catastrophe bonds (cat bonds), reinsurance 157: Life reinsurance industry embraces third-party capital & sidecars: Damian Cooper, PWC Bermuda
Sep 16, 2024
12:41
The life reinsurance industry in Bermuda has embraced the use of third-party capital structures and investor relationships, with sidecars now an established and growing feature of the market, Damian Cooper of PwC Bermuda explained in a recent interview.
Our latest Artemis Live interview is with Damian Cooper, an experienced audit focused Partner in the Insurance team at PwC Bermuda.
Cooper has a focus on the reinsurance industry, particularly the life sector, and also leads PwC’s capital markets, accounting and regulatory advisory practice within Bermuda.
With 20 years experience at PwC supporting life and general insurance clients in Australia, the UK and Bermuda, Damian has also audited several reinsurer’s ILS and third-party capital operations.
During our interview, Cooper pointed to the health of the life reinsurance market in Bermuda and highlighted a continuous trend towards innovation in the relationships between cedents and investors or asset managers.
Cooper explained some of the trends driving this.
He told us that, "On the demand side from the life reinsurers, it's worth noting that, obviously, reinsurers are fairly restricted, there's a real limit on a regulatory capital perspective on their ability to use debt financing so they are relatively dependent on equity.
"So third party capital has really been seen as an attractive way to grow, given its relative cost and flexibility as a tool to fund that growth, and given just the size of where these life reinsurers are going, there is a constant need, or a fairly steady need, to attain new capital to be able to fund that growth.
"For the established reinsurers, the use of third-party capital and those sidecars also gives an opportunity to generate sort of management fee income, right, so to create another revenue source for them as part of their wider sort of return to their primary equity holders.
"Then also, depending on the source of third-party capital, it can be used to ensure you get a good long-term alignment of interest between a ceding company or an asset manager and creating that sort of more symbiotic relationship on the reinsurance side, and then on the supply side.
"The existing success of those third-party capital vehicles is generating its own appetite for people looking at an effective way to essentially invest into the life reinsurance market and to be able to partner up or access the successful management teams, as they were, and their expertise in underwriting and asset management."
Listen to the full podcast episode for more insights from PwC Bermuda's Damian Cooper.
Our latest Artemis Live interview is with Damian Cooper, an experienced audit focused Partner in the Insurance team at PwC Bermuda.
Cooper has a focus on the reinsurance industry, particularly the life sector, and also leads PwC’s capital markets, accounting and regulatory advisory practice within Bermuda.
With 20 years experience at PwC supporting life and general insurance clients in Australia, the UK and Bermuda, Damian has also audited several reinsurer’s ILS and third-party capital operations.
During our interview, Cooper pointed to the health of the life reinsurance market in Bermuda and highlighted a continuous trend towards innovation in the relationships between cedents and investors or asset managers.
Cooper explained some of the trends driving this.
He told us that, "On the demand side from the life reinsurers, it's worth noting that, obviously, reinsurers are fairly restricted, there's a real limit on a regulatory capital perspective on their ability to use debt financing so they are relatively dependent on equity.
"So third party capital has really been seen as an attractive way to grow, given its relative cost and flexibility as a tool to fund that growth, and given just the size of where these life reinsurers are going, there is a constant need, or a fairly steady need, to attain new capital to be able to fund that growth.
"For the established reinsurers, the use of third-party capital and those sidecars also gives an opportunity to generate sort of management fee income, right, so to create another revenue source for them as part of their wider sort of return to their primary equity holders.
"Then also, depending on the source of third-party capital, it can be used to ensure you get a good long-term alignment of interest between a ceding company or an asset manager and creating that sort of more symbiotic relationship on the reinsurance side, and then on the supply side.
"The existing success of those third-party capital vehicles is generating its own appetite for people looking at an effective way to essentially invest into the life reinsurance market and to be able to partner up or access the successful management teams, as they were, and their expertise in underwriting and asset management."
Listen to the full podcast episode for more insights from PwC Bermuda's Damian Cooper.