More news from the Cat House: The unregulated, nefarious Bermudan market for collateralized reinsurance. Can’t match those yields…

That’s right folks, this is the market our politicians like Commish Mike Chaney and his band of GOP idiots tell us we should trust and believe in. Never mind what happened when this coutry’s official economic policy was to trust the unregulated derivates market,┬áthe gang in Jackson has their story and they are sticking to it. Perhaps this is also why our state’s windpool has become a bottomless pit for taxpayer subsidy. I’ll let the good folks at Risk and Insurance Online explain:

But perhaps the investor summed up all his unspoken concerns when he stood up at the end of the presentation and asked, in not so many words: Isn’t it true that you reinsurance guys keep all the good catastrophe risks for yourselves, then give what’s left to catastrophe bond investors?

It is a matter of debate whether the speakers denied that or not, but what they did say definitely is that collateralized reinsurance has its own special place in the world of insurance-linked securities (ILS), separate from CAT bonds. It’s not that one product covers better property-catastrophe risks than the other.

It’s that collateralized reinsurance has found itself a niche at the bottom of the reinsurance program. Collateralized reinsurance usually comes into play at the lowest layers of a primary carrier’s reinsurance program. We’re talking even below the traditional “working layers” where the big-name reinsurers play.

Yep we have a new kid on the block in Collateralized Re and guess what kids? It operates in a non transparent market out of Bermuda as we continue: Continue reading “More news from the Cat House: The unregulated, nefarious Bermudan market for collateralized reinsurance. Can’t match those yields…”