Resolute Global, formerly known as ILS Capital, a registered investment advisor focused on niche opportunities in the insurance and reinsurance space, has partnered with broker Gallagher Re and catastrophe modeller Karen Clark & Company (KCC) to launch a new reinsurance product called Footprint.
Resolute describes Footprint as a “completely new type of reinsurance contract” focused on risks associated with natural catastrophes in the United States and employing advanced risk modeling technologies to give solutions to insurance firms and investors.
According to Resolute, the new product can address a variety of challenges that have affected the securities linked to the insurance and reinsurance industries including concerns with stranded capital, extended settlement periods, economic inflation, social inflation, non-modeled risks, and pricing uncertainty.
Footprint as a reinsurance product entails a cedent insurer submitting its exposure file, which is fixed at the start of the contract.
If a covered event occurs, the risk modeller KCC will calculate the cedent’s eventual loss by superimposing the event’s intensity footprints on the insurer’s fixed exposure profile.
The model-determined loss is then paid to the insurance company within 30 days, while the contract is automatically commuted within 30 days of maturity, allowing risk investors to get their original investment plus any gains, or less any losses, instantly.
The entire package is the unique selling point here, as bespoke hybrid parametric-type setups or modeled-loss footprint triggers that entail event characteristics (modeled or otherwise) being placed on top of an exposure footprint have previously been seen.
“We’re proud to lead the market with another innovative insurance solution,” said Tom Libassi, Co-Founder and Managing Partner of Resolute Global. Footprint allows investors to gain on the present favorable rate environment while avoiding the issues that have plagued the business in recent years. We believe this product has the potential to alter the reinsurance sector due to the significantly enhanced structure, terms, and pricing that Footprint gives to insurance companies and investors when compared to previous contracts.”
“Severe convective storm losses dominate weather-related property claims in the United States,” said Karen Clark, CEO of KCC. We are happy to be collaborating with Resolute Global to bring the market this unique transaction that provides substantial cover for severe convective storm losses as well as a transparent, fast, and highly efficient alternative for investors to enter the market.”
“We are pleased to have advised Resolute Global on this innovative reinsurance contract,” said Doug May, President of Gallagher Re North America. In this competitive environment, we believe this new product will assist our clients extend their sources of capacity.”