The influx of alternative capital from the investment community is keeping reinsurance prices low with plenty of capacity available heading into the Atlantic Hurricane season, says reinsurance broker Guy Carpenter.

In its most recent briefing report, Guy Carpenter says higher yields are drawing investors to the alternative reinsurance market, which over the last 18 months has produced approximately $10 billion in new capital in the form of catastrophe bonds, sidecars and collateralized structures. The capital emanating from the alternative market has grown significantly over this period accounting for an estimated $45 billion, approximately 14 percent of global property limit.

This influx of capital is changing “the nature of the sector's capital structure as investors grow increasingly comfortable with supplying capacity,” the briefing says. The change is impacting reinsurance pricing for peak property catastrophe risk in the U.S., driving June 1 renewal rates downward and likely through the rest of this year.

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