| |
Solvency II will encourage considerable growth in the insurance-linked securities market. “It is clear that the increase in return on equity has been directly proportional to growth in the securitisation market throughout the 1990s and 2000s” says Rick Watson, Managing Director of the European Securitisation Forum.
At present, all an insurance company can do to achieve capital relief is purchase reinsurance. The problem with this is that there are a finite number of highly rated insurers. “From a corporate ratings perspective, if an insurer purchases reinsurance from a low rated insurer they don’t get full capital relief. This chews up the capacity of those insurers”.
Solvency II gives insurers more choice and flexibility. “It enables an insurer to select which market offers the best execution at any particular time. At one point it could be the reinsurance market whereas at another point it may be the securitisation market, or perhaps the derivatives market” Watson comments.
Insurers need to prepare for this new legislation now, and there are plenty of lessons to be learned from Basal II in the banking world. “The most important lesson is the importance of showing the capital relief for the risk that has actually been transferred.” This will require adjustments to be made to balance sheets and in IT so insurers have the data in their portfolios that they need to disclose to investors. “Certain portfolios will be winners and some will be losers just like it was on Basal II”.
Solvency II will be explored in detail at the European Insurance-Linked Securities and Cat Bond Summit 2008 which takes place on 7-8 February. The summit agenda has been written with the input of some of the most leading authorities in ILS and will be presented by the most expert line-up of speakers to assemble in Europe to date.
Speakers include Luca Albertini (Swiss Re), Dr Milan Simic (AIR Worldwide), Dr Andreas Muller (Risk Trade Unit, Munich Re), Rodrigo Araya (Moody’s Investors Service) and Cameron Heath (Standard and Poor’s) amongst many others.
Speaking about this market-leading event, Watson said, “We welcome every form that brings together issuers, investors and arrangers to get ready for the implementation of Solvency II.”
The summit is completely independent and will make sure issuers, sponsors and investors are given a concise guide to guarantee their success and long-term competitiveness in the ILS and cat bond market. It provides a superb opportunity for you to make contact with new clients and solution providers, and will ensure that you are correctly positioned to benefit from the rapidly expanding ILS market.
Visit ilstoday.com to find out more about this exciting who’s who event and to find out how to qualify for a discount of up to £300 on the full price!
ILS Today
The European ILS and Cat Bond Summit 2008 has been organised by ILS Today. We are a new company who provide intelligence, collate news, interview the world’s leading ILS experts and organise senior level business to business events specifically for the ILS community.
|
ian[.]ilstoday.com 
