by Will Dove

ILS assets have delivered growth, performance and diversification to investors over the past two decades despite an absence of real liquidity and antiquated investment structures that can result in trapped collateral and lack of transparency. In today’s hardening reinsurance market, with prices going up and capacity being withdrawn, ILS investors have more leverage than ever to demand permanent improvements to the structure of the market in addition to those possibly short-lived pricing increases.

Extraordinary Re was created to address the shortcomings of today’s market. The current state of the reinsurance market presents an opportunity for investors to realize lasting improvements far more valuable than a short-term increase in rate on line for catastrophe reinsurance. By deploying capital through Extraordinary Re, institutional investors can work together to create a dynamic marketplace featuring:

• contract-level trading liquidity;
• price discovery far more timely and transparent than the annual reinsurance renewal process;
• and for investors with diversified portfolios, the ability to benefit from operating leverage.

The insurance industry is more dependent than ever on reinsurance support from the ILS market. Investors can expect to see greater demand for capital and opportunities to earn attractive risk-adjusted returns going forward. Now is the time to implement meaningful and lasting changes in how capital is deployed, valued and managed. Don’t let this crisis go to waste!