Team will link insurance and commodity markets

Evolution Markets has launched brokerage and structured transaction service for the emerging catastrophe derivatives market, which provides risk management solutions for insurance and reinsurance companies, as well as banks, hedge funds, and energy marketers relating to catastrophic weather events such as hurricanes.

The Evolution Markets Catastrophe Derivatives division will assist market participants in identifying exposure to catastrophic weather, quantifying and managing risk, and executing transactions in catastrophe derivatives markets.

Evolution Markets also provides structured transaction services to the catastrophe derivatives market, custom tailoring trades to meet specific insurance or reinsurance risk management needs. The desk will work closely with Evolution Markets’ industry-leading global Weather Derivatives Markets team to expand the network of counterparties available to its clients and improve deal execution.

Andrew Ertel, President and CEO of Evolution Markets, said: “Our catastrophe derivatives desk will provide a bridge between the insurance and reinsurance industry and a deep pool of liquidity in global weather markets. We anticipate this will provide our clients with an efficient marketplace and improved execution of risk management strategies.”

The Evolution Markets Catastrophe Derivatives team is led by Nicholas Ernst, head of Evolution Markets Weather Derivatives group. Mr. Ernst is joined by Jeremy Crowch, an experienced reinsurance specialist in risk management and an experienced participant in the catastrophe derivatives market. Crowch joins Evolution Markets from Gallagher Re in London, where he was responsible for the production and placement of Industry Loss Warranty business, as well as traditional property reinsurance placements. He has also held a similar position at Willis Re in London. Crowch will work from Evolution Markets London offices.

Ertel added: “These industries take on trillions of dollars of exposure each year related to catastrophic weather events, and Jeremy has been adept at crafting new risk management solutions.”

Catastrophe derivatives trading is essentially a commodity markets transaction between a buyer hedging indemnity risk related to major weather events and a seller seeking to manage weather risk exposure or to achieve returns on invested capital. In practice, catastrophe derivatives provide a market-based tool for insurance and reinsurance companies to quickly and efficiently spread risk by accessing a broad and deep pool of liquidity.

Companies can access catastrophe derivatives markets with Evolution Markets either through bi-lateral trades conducted over-the-counter or using contracts trading on a handful of global commodities exchanges, including the Chicago Mercantile Exchange (CME), the New York Mercantile Exchange (NYMEX), and the Insurance Futures Exchange (IFEX).