SESSION 02. Alternative Risk Transfer and Insurance-Linked Securities

2. Alternative Risk Transfer and Insurance-Linked Securities.

Alexander Braun
(University of St. Gallen). alexander.braun@unisg.ch


The increasing convergence of insurance and capital markets throughout the last two decades has led to the development of substitutes for traditional reinsurance contracts which are known under the term alternative risk transfer (ART). Insurance-linked securities (ILS), the most successful of these new tools, are financial instruments that allow sponsoring (re)insurance companies to hedge systematic insurance risks such as natural disaster or mortality/longevity exposures and offer investors an attractive source of yield paired with a low return volatility and very little correlation to other asset classes such as stocks, government and corporate debt, real estate, or commodities. In 2017, the amount of alternative insurance and reinsurance capital has reached new highs and clearly became a permanent force to be reckoned with. This session could bring together the leading researchers in this modern and fast-growing area of the insurance industry.

Main objectives: Discuss and present the latest insights on the impact of alternative capital in the insurance industry. This may include the pricing and risk premiums of systematic insurance risks, the application of ART instruments beyond the traditional insurance industry, the perspective of ILS investors, the future of the insurance industry in a world with strong alternative capital capacity and other related research questions.