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Episode 2: New York


The city that never sleeps was on sparkling form last week, with the sun shining brightly in many respects.

As I arrived, another deal was announced, this time with the chaps at Enstar taking $500 million of Zurich’s North America asbestos and environmental risk. Congratulations to both, and of course to the brokers and advisers who help support and execute complex deals like this. They continue to reinforce the reputation and credibility of the legacy sector.

Guess which hedge fund has the best view of Central Park?

The recent US buzz has been about legal finality and insurance business transfers. IBTs are just another mechanism for insurers and reinsurers to exit non-core business – just like selling a subsidiary through a share sale or a reinsurance agreement. But IBTs still hold a degree of mystery in the market, especially for regulators. The NAIC working party on IBTs is a great step towards de-mystification, but one view is that IBTs will only really gain traction when “New York, New York!” comes on board.

Brokers are prevalent here – they’re certainly more embedded in the structured solutions market than in Europe. This is mainly because of the lack of legal finality and dependence on LPTs to drive solutions. Accounting and regulatory treatment are key to achieving capital relief, and it is clear that the bigger the deal, the great the ability to drive through capital relief structures.

Brokers are anxious to ensure they keep their market share, but they shouldn’t be concerned that going direct will damage their business. There is more than enough legacy to go round!

Next, I am off home to Vancouver! I can’t wait to see my son captain the school rugby team – I should catch the last match of the season just after Easter.