The expansion of alternative risk capital beyond its property cat reinsurance heartland and into new classes of business is at the heart of a new MMC initiative aiming to draw together experts from its retail broking powerhouse, Marsh, and its reinsurance sister organisation, Guy Carpenter.
In an internal announcement, Marsh said its new unit, Alternative Risk Transfer Group, would combine risk professionals from both Marsh and Guy Carpenter, together with actuarial and analytics functions to provide “innovative financial solutions for clients that draw on a mix of traditional and alternative capital sources”.
In recent years, a number of ILS funds have begun to broaden their appetite into primary insurance by partnering with brokers or insurers. Those include Bermuda ILS powerhouse Nephila, which has a follow-form arrangement with US wholesaler AmWins.
More recently, Nephila – thought to be the industry’s largest ILS fund as measured by assets under management – backed Alternus, a commercial property insurance facility offered exclusively through Marsh.
In the announcement, Marsh said: “Alternative capital is already having a profound effect on the reinsurance market, which is now having ripple effects on retail insurance.
“As a result, risk professionals and C-suite executives are seeking new and fresh ideas that may challenge traditional risk financing strategies.”
Areas of focus include: pandemics, ILS, alternative capital-backed facilities, adverse development covers, loss portfolio transfers and multi-year single-limit cat risks, as well as insurance options, where a buyer pays a smaller premium for the right to purchase insurance at a set price in the future.
Marsh said the Alternative Risk Transfer Group would be headed by its US property practice leader Duncan Ellis and his colleague Chad Wright.