GC’s Rousseau: Buyers looking to alternative solutions in bid to smooth volatility

An increasing number of buyers are showing interest in alternative reinsurance structures amid current market dynamics, according to Guy Carpenter’s Laurent Rousseau.

In his first interview since joining the reinsurance broker last month, Rousseau told The Insurer the reinsurance market remains at a “delicate phase” in its transition, with reinsurers determined to achieve adequate returns.

“Prices have increased considerably and while we are seeing clear evidence of price stabilisation, there is always a critical balance between price and value of cover that must be achieved. By pushing prices too strongly, reinsurers risk questioning the value they bring to their clients,” he said.

Against this backdrop, Rousseau said there was now considerable interest in the adoption of alternative reinsurance structures as a longer-term mechanism to smooth P&L volatility, as well as the introduction of alternative structures to provide balance sheet protection and to release capital locked-in by volatile technical reserves.

“We are also seeing continued growth in the alternative sources of capital entering the market. These include pension funds, sovereign funds and other long-term capital providers. However, to facilitate greater inflows and elevate the role of the capital markets, investors are keen to see an increase in potential returns,” he said.

Rousseau is one of the speakers at this year’s Guy Carpenter Baden-Baden Reinsurance Symposium, which takes place today at Kongresshaus Baden-Baden.

Look out for coverage of the event in tomorrow’s Baden-Baden daily edition from The Insurer.