(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.
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