With the UK having updated its insurance-linked securities (ILS) regulatory and tax regime last year in an effort bolster its competitiveness throughout the transition out of European Union membership, the Managing Director of GC Securities, Des Potter, has discussed how London can build on its early success and become an innovation hub.
In May, SCOR became the first reinsurer to utilise the new regime and sponsor a catastrophe bond.
GC Securities, the capital markets investment banking and ILS focused unit of reinsurance broker Guy Carpenter, acted as the sole structuring agent and bookrunner for the $300 milion transaction under the UK risk transformation legislation.
“The UK ILS framework is an excellent example,” explained Potter, “of how an industry body such as the London Market Group can work collaboratively with Government to bring innovative and long-lasting benefits to the UK re/insurance economy.”
“The two transactions to date are a positive start, but what lessons can we learn to enable London to build on this and achieve its ambition to become a global hub of innovation for the ILS market?”
Potter believes that the key to London’s success will be innovation that matches the right tisk with the right capital, at the right price.
“The experience of the reinsurance market after the catastrophe losses in 2017 demonstrated that for many, the ILS market is currently the ‘right’ source of capital for property cat risks,” said Potter.
“The ILS market has been a catalyst for the current evolution in the reinsurance market – London must be at the forefront of this change to maintain its global presence.”