Pool Re has appointed GC Securities, the capital markets and insurance-linked securities (ILS) arm of reinsurance broker Guy Carpenter, to act as its ILS advisor and placement agent as it assesses its options in the capital markets.
Pool Re, which is the UK’s government-backed mutual terrorism reinsurance facility, began exploring the viability of transferring its risk to the ILS and capital markets in March 2018.
It hopes to use GC Securities, which it hired following a competitive request for proposal (RFP), to assess the structures available in these markets, the viability of a placement, and the extent of the capital market’s appetite for terrorism risk.
Julian Enoizi, Chief Executive Officer (CEO) of Pool Re, said: “One of Pool Re’s core aims is to normalise the UK’s terrorism (re)insurance market and allow as much of the risk as possible to be underwritten in the commercial markets.
“Extending our protection by accessing the ILS market is something which we have been looking at for some time. With recent legislative change in the UK, the environment is now conducive to exploring this further.”
As the terrorism protection gap in the UK continues to grow, Pool Re is looking to gradually move the taxpayer as far away from the risk as possible with innovative and effective new risk transfer solutions.
Last month, Pool Re’s Chief Information Officer (CIO), Ian Coulman, indicated that although Pool Re can currently withstand a terrorism loss event of about £12 billion, the terror retrocessional reinsurance market is of finite size and the capital markets may offer a way to secure complementary coverage.
Enoizi continued: “We have significantly improved our own understanding of the risk, developing more robust modelling capabilities and gaining significant experience from the success of our reinsurance programmes. Now is the right time to explore the appetite of broader capital for this increasingly well understood peril.”
James Nash, President, International at Guy Carpenter, also commented: “We are delighted and honoured to be awarded this prestigious appointment. Guy Carpenter has worked closely with Pool Re to assist with the development of its innovative risk model and the placement of its traditional reinsurance programme.
“This new engagement provides an exciting opportunity to explore the benefits of structuring and placing terrorism risk with the ILS market. It is also an opportunity to showcase the UK ILS industry and enhance Pool Re’s position as a pioneer in the global terrorism reinsurance market.”
