Recent reforms made by Prudential Regulation Authority (PRA) to increase the UK’s share of the global insurance-linked securities (ILS) market, has led to belief that the UK regime offers a highly competitive platform that compares well with other alternative jurisdictions across the globe, Pool Re CEO Tom Clementi told Artemis.
“The domestic regime in the UK provides us with a very good platform to access the capital markets. It allows us to work closely with the domestic regulator and facilitates a smooth path to ILS capital,” the CEO said.
Moving towards the recent reforms that the Prudential Regulation Authority has made to the approval processes, Clementi said that these have been “very welcome.”
“I now believe that the UK regime offers a highly competitive platform that compares well with alternative jurisdictions around the world. With a simple notification to the PRA, and with greater authority delegated to the issuing entity to issue the notes, there is now very limited red tape and a high degree of operational simplicity. That makes it much easier for us as an issuer, and it also encourages us to issue more regularly,” Clementi added.
“We have now moved to an annual issuance cycle, rather than issuing every three years. So I would certainly pay tribute to the PRA’s reforms, because the regime is now an attractive one for organisations like Pool Re and for the London Bridge structure. Whereas previously it might have taken months to obtain approval, the process is now much swifter, and, as I say, I think it is competitive when viewed against alternative jurisdictions.”
Moreover, Pool Re recently sponsored its fourth catastrophe bond with the company successfully securing its targeted UK £100 million of terrorism retrocession, as the Baltic PCC Limited (Series 2026-1) issuance priced at the mid-point of guidance,
This also marked the first time that the reinsurer was looking to sponsor a new issuance while a previous cat bond was still in-force.
With this in mind, we asked Clementi to what extent are the strategic drivers the same as when Pool Re first entered the market in 2019, and what specific benefits capital markets retrocession provides to Pool Re today.
“I think the strategic rationale for tapping into the capital markets remains very similar to when we first entered the market in 2019 with Baltic Re 1,” the CEO said.
“It is fundamentally about returning risk to the private market, in order to distance the British taxpayer from financial loss following a large terrorism event in the UK. So, returning risk is really at the heart of the ILS strategy.”
Clementi also added that this allows the firm to purchase protection that helps safeguard Members’ funds, whilst highlighting how throughout the last 30 years, Pool Re has managed to build a substantial fund.
“The ILS protection, which sits alongside our traditional retrocession programme, both helps to distance the British taxpayer from loss and protects Members’ funds. That, in a nutshell, is the rationale, and it very much remains the case today, just as it was back in 2019,” Clementi concluded.
The UK government recently said it will pass reforms through legislature to promote insurance-linked securities (ILS) innovation in the country and facilitate a wider range of transaction structures.
Read all of our interviews with ILS market and reinsurance sector professionals here.
