In a sign of how third-party flows from institutions looking to access the reinsurance market are transforming the traditional marketplace, RenaissanceRe Holdings Ltd. announced Monday it would buy reinsurer Platinum Underwriters Holdings Ltd. for $1.9 billion.
While Swiss Re said in its investor day earlier this year that alternative capital is “unlikely to replace the traditional reinsurance market,” ACE Ltd. CEO Evan Greenberg recently said, “M&A activity will increase particularly around companies that will find it more difficult in this environment to continue with the strategies that have served them in the past.”
Year-to-date Nov. 21, the Swiss Re Cat Bond index posted a total return of 6.2%, compared to 10.7% over the same period in 2013; as investor flows have driven spreads to historic lows.
CalPERS, CalSTRS, Florida State Board of Administration and the Kentucky Teachers’ Retirement System were among the owners of both RenaissanceRe and Platinum, according to most recent 13F filings.
