Tokio Millennium Re launches ILS platform
LONDON, Sept 11
LONDON, Sept 11 (Reuters) - Tokio Millennium Re has launched an insurance-linked securities (ILS) platform and a Bermuda-based reinsurance company via two cell companies, the firm said in a statement today.
The reinsurer said it wanted to access capital market investors who are taking an increased interest in reinsurance and the increasingly popular ILS market. ILS offer investors relatively high returns in exchange for promising to pay some claims if a natural catastrophe occurs.
Tokio Solution Management Ltd will give investors access to the ILS market. ILS sales have burgeoned this year thanks to a growing perception that they are insulated from mainstream financial and economic shocks.
Shima Re will act as a 'transformer vehicle', a process by which companies use a reinsurer to convert the insurance risk into catastrophe bond notes. So-called 'cat bonds' are the most common form of ILS and allow insurers to manage their exposure to natural disasters by passing on potential losses to investors.
Sales of cat bonds have hit new records and are expected to reach $6 billion by the end of the year, according to Aon Benfield. Growth in the sector has been spurred by a number of new companies backed by hedge funds entering the market in recent months.
Kathleen Faries, currently executive vice-president at Tokio Millennium Re, will become CEO of Tokio Solution Management.
-(Reporting by Sarah Mortimer; Editing by Catherine Evans)
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