The market for aggregate reinsurance coverage remains “fraught” with a wide gap between bid and ask, Greg Hendrick, President and CEO of Vantage Risk has explained, but his firm still finds opportunity in that area of coverage, deploying capital to that opportunity through its AdVantage collateralized insurer class of company in 2025.
Speaking with Artemis in a recent interview, Chris McKeown, Chief Executive, Reinsurance, ILS, and Innovation, at Vantage Risk, told us that the firm had deployed a substantial amount of its $1.5 billion 2025 partnership capital raise, and was expecting to deploy the remaining capacity of over the rest of the mid-year renewals.
It seems that goal was achieved, as Vantage Risk CEO Hendrick said yesterday, “We deployed a billion and a half this year. We don’t execute it as a sidecar, we execute it as a separate, what’s called segregated cell. So we directly interact AdVantage with our client base.”
Discussing ILS market conditions and the role it has played around the reinsurance renewals, Hendricks noted the record levels of catastrophe bond issuance seen, as well as the fact large re/insurers are ceding increasing amounts of risk to ILS capital.
On the renewals he said, “Overall, it was a great marketplace to trade. At Vantage we’re trading across insurance, reinsurance and AdVantage our ILS vehicle. So we see across the market.”
Asked about developments in the market for aggregate protection, Hendrick noted it’s still not a straightforward product area to do business in.
“I’d say on the aggregate lens, we definitely at AdVantage provide that cover. It’s a very fraught market at the moment, the difference between the bid and the ask, what the buyers willing to pay and what the capacity provider is willing to sell is a bit gapped out at the moment, and so we don’t trade as much of that as we could,” Hendrick explained.
Adding, “But there was a little bit more activity on that aggregate market side, which I think is a healthy thing.”
He continued to say that, “There’s nothing wrong about aggregate as a coverage in general. It’s just for quite a while the market under-charged it and selling that aggregate led to an inability for us to meet our costs of capital over time.”
But that hasn’t hindered Vantage in finding opportunities to deploy capital raised for the AdVantage structure this year, it seems.
Hendrick said there was, “Strong investor interest and strong take-up from clients, particularly given the strategy we’ve decided to deploy, which is generally speaking lower down and some of the aggregate coverage I mentioned before.”
On the ILS market in general, Hendrick concluded it is, “Very healthy, very robust. I think the next big phase of it is, how do we get it to apply more to other lines of business, specialty lines of business? We’re starting to see some beginning in cyber and some beginning in casualty as well. How do we bring some of that alternative capital to bear there as well?”
