“Alternative capital” from hedge funds, pension funds and other yield seeking institutional investors is becoming a larger piece of the reinsurance marketplace, notes a recent study from the U.S. Treasury Department. One report observes that over half of the capital supporting alternative reinsurance originates from “pension funds, endowments and sovereign wealth funds, generally through specialized insurance-linked investment funds.”
In the space, alternative reinsurance solutions instruments have primarily been geared toward property catastrophe risks, which offer a relatively short time horizon to maturity, allowing investors to participate in contracts of a few years or less and evaluate returns soon after contract expiration.
Pension Funds, Hedge funds: Polarity...
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