The roving eye of private equity has been caught by more immediately gratifying options
It was good while it lasted, but for now at least, the marriage between reinsurance and private equity seems to be on the rocks.
As the delegates pointed out at our roundtable discussion in New York, it was only ever a marriage of convenience. While the formation of reinsurance companies at times of market dislocation once provided a route to market almost unique in its speed and capacity for high returns over a number of years, times have changed.
New partners have come along in the form of sidecars and other capital market vehicles, providing cleaner and simpler ways of injecting capital for specifi ed periods of time. And with reinsurance looking less attractive, private equity has had its roving eye caught by more immediately gratifying options, such as banking and asset management.
That said, a reconciliation can never be ruled out. All it would take is the right event or series of events to turn the market, and suddenly reinsurance could be riding high again.
As the delegates concluded, the best thing any reinsurance company can do in the meantime is make sure it is in the best possible shape for when the good times come again.
- PDF, Size 6.99 mb
Ellen Bennett, executive editor, Global Reinsurance