Resolute Global Partners, an investment advisor specialising in insurance and reinsurance, has launched Footprint, a new type of reinsurance contract.
The contract was launched in partnership with global reinsurance broker Gallagher Re and catastrophe modelling firm Karen Clark & Company (KCC).
Footprint can be used for any type of catastrophic event, from severe convective storms and wildfires to hurricanes and earthquakes. The first Footprint transaction is focused on severe convective storms, among the most common, most damaging natural catastrophes in the US.
These storms, which can include tornadoes, hail, and high winds, have been one of the costliest perils for insurance companies, according to Resolute. As a result, insurance companies are demanding more coverage while reinsurers are limiting supply, a dynamic that highlights Footprint’s value in the market.
Footprint’s structure solves a number of problems that have vexed the reinsurance industry and its investors since 2017, including trapped capital, extended settlement times, economic inflation, social inflation, non-modeled risks, and pricing uncertainty.
The product’s benefits include rapid claim settlement (within 30 days of an event); automatic commutation (within 30 days of contract maturity); and fixed exposure risk. Unlike other products such as parametric triggers, industry loss warranties and cat bonds, Resolute said this approach provides a more accurate assessment of storm losses than what is currently available, giving insurance companies cost-effective coverage and critical liquidity post-event while also offering investors a more efficient way to access the property reinsurance market and earn attractive returns.
Tom Libassi, co-founder and managing partner of Resolute Global, said, “We’re proud to lead the market with another innovative insurance solution. Footprint gives investors the opportunity to capitalize on the current attractive rate environment – freed from the problems the industry has been grappling with over the past several years. Given the much-improved structure, terms, and pricing that Footprint provides to insurance companies and investors compared with other contracts, we believe this product has the potential to transform the reinsurance industry.”
Earlier this year, SageSure, a provider of catastrophe-exposed property insurance, raised $50m to fuel its growth.
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