Reinsurance broker Howden Re has released a new report in which the firm sets out a framework for introducing a secondary reinsurance market, noting that it would allow carriers to more efficiently allocate risk, which would ultimately improve and drive greater overall capital efficiency.
The firm’s report explained that reinsurance functions as a type of contingent capital, highlighting that by taking on losses, it mitigates earnings volatility and diminishes the risk faced by equity and debt holders.
