(Bloomberg) — Pension and hedge funds flush with cash and hungry for yield are creating a market for reinsurers willing to look past the price cuts these investors have inflicted on traditional catastrophe coverage.

The growth of insurance-linked products that allow investors to participate in the reinsurance market is "more friend than foe," Henning Ludolphs, who oversees this burgeoning area of business at Hannover Re, said at a press conference in Hanover on Tuesday. "The world is changing."

Capital markets offer "extra protection and risk transfer as well as an opportunity to earn fees," Ludolphs said. The reinsurer is earning fees in the "low, two-digit million-euro range" for arranging reinsurance coverage for industry outsiders, he said, without giving a precise figure.

Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader

  • All PropertyCasualty360.com news coverage, best practices, and in-depth analysis.
  • Educational webcasts, resources from industry leaders, and informative newsletters.
  • Other award-winning websites including BenefitsPRO.com and ThinkAdvisor.com.

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.