Collateral

Vantage in the Face of Extreme Investor Risk and Trapped Collateral Issues: McKeown

Working with third-party capital investors, Vantage Risk Ltd., the nearly two-year-old Bermuda-based insurance and reinsurance company, finds it important to help alleviate the challenges investors face with traditional ILS products.

Vantage was launched with a focus on third-party or alternative capital, with senior executives joining the company who have significant expertise in insurance-linked securities (ILS) and reinsurance capital markets.

Speaking to Artemis around the Monte Carlo Rendezvous 2022 event, Chris McKeown, Managing Director, Reinsurance, ILS and Innovation at Vantage, discussed the company’s approach to third-party capital and ILS, as well than how she sees all of the current opportunities.

McKeown explained, “From day one at Vantage, we have thought about the role that ‘alternative’ capital, or as I like to call it, partnership capital, can play in our journey.

“We don’t see ourselves strictly as a source of risk to third-party capital. We want to build a partnership capital model that provides transparency for third-party investors, opportunities to participate alongside Vantage in portfolios where we see opportunity, and where we see more opportunity than our own careful risk management will allow us to bear our own record.”

Currently, McKeown says Vantage sees opportunities to continue to grow its business, with partnership capital being a supporting feature of the business model.

“The market is probably tightening further. The industry saw some real estate catastrophe programs in July partially disappear. There is no indication that the fundamentals will change by January,” he explained.

Adding that “Necessity being the mother of invention, we are delighted to be able to meet the increased capacity needs of customers.

“We have the underwriting expertise and relationships to weather what appears to be a tough market and we are building the analytical platforms to better ensure we are hitting our pricing and performance metrics on our portfolio. “

McKeown also noted that as a still relatively young re/insurer, Vantage may have an edge in the current market environment.

“Give me a shot for new capital, namely Vantage,” he said. “For those with a long tail or insufficient claims reserves, the gains from rising interest rates will always lag. This is not the case for the new and nimble.

“Vantage started with small lines to build a long-term sustainable business. This has kept us smart and nimble, based on our risk tolerance. As an additional barometer of conditions, we continue to see more business that we cannot accept as part of our thoughtful underwriting process.”

All of this suggests opportunities for investor partners providing capital through Vantage’s ILS structure that she established shortly after the company launched.

We reported at the time that Vantage established its first insurance-linked securities (ILS) vehicle in Bermuda in early 2021, shortly after its launch, a collateral insurer class company named AdVantage Retro I Ltd.

McKeown commented on this, saying, “One of the first things we did when we started Vantage was also create AdVantage, in response to investor appetite to partner with us as we grow our business. .”

He underscored the need for ILS structures to meet the needs of investors, saying Vantage has worked to help alleviate some of the issues that ILS investors face through typical collateralized reinsurance structures.

McKeown explained, “This vehicle is adaptable to multiple market strategies and approaches, and in partnership with Vantage, we will seek to address some of the challenges for investors like tail risk and trapped collateral.”

Finally, we asked McKeown for his view on how a reinsurer like Vantage Risk can navigate changing market and global dynamics, while making the best use of the capital it has.

“Collectively, we would do well to continue to find ways to bring more capital (and more efficient capital) into our industry to improve our relevance in a rapidly changing risk landscape, whether due to demographics, inflation or climatology,” he advised. .

Find all our interviews with professionals from the ILS market and the reinsurance sector here.

Printable, PDF and email version