Trading Risk Monte Carlo Roundtable 2014
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Trading Risk Monte Carlo Roundtable 2014

p2 cat bond volume forecasts

Dear friend,

"There's nothing to talk about!" is one of the most frequent complaints that I've heard at the past couple of Monte Carlo Rendez-Vous.

In retrospect, you have to ask whether this was wilful blindness or misdirection - the classic "move along, nothing to see here" attitude.

It's true there were no hard-hitting headlines about catastrophe losses, no overt signs of claims reserves running dry and relatively healthy results for an industry sagging under the weight of its own capital.

But this year, the strain became evident.

There was more of a sense of fraught urgency to the gossip (and there was more of it) about potential M&A pairings and talk about consolidation of reinsurance panels.

It wasn't all market chatter either - there were concrete news developments that highlighted carriers' continuing worries about access to business.

Notably, Ace and BlackRock were revealed to be working on a joint venture that would channel a large proportion of the insurer's outwards reinsurance spend into an internal Hedge Fund Re.

Ironically, the one topic that wasn't on the agenda was the very development that you could argue has pushed forward all this change - the growth of the alternative reinsurance market.

Is it finally the case that traditional competitors have tacitly accepted it's here to stay? Either way, we like to think that the debates at the Trading Risk roundtables have always focused on the real issues.

So it was the same big problems - accessing business, growing the market - that occupied our panellists at this year's Monte Carlo event.

The Mariah Re legal case was clearly in the back of some minds when conversation turned to the topic of whether distressed debt investors could threaten the claims handling process in the cat bond market.

I'd argue, though, that this is a red herring, since the most important relationship for cedants if they do have to make a claim is with the administrator of a cat bond, rather than the direct investors.

At any rate, I hope you find the panel debate to be illuminating.

Enjoy the read, to view the supplement please click here.

Fiona Robertson

Editor

Trading Risk

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