17SECURIS INVESTMENT PARTNERS |
BEST PRACTICE REPRESENTATIVE 2019
to doing business. We were sure that
investors would eventually see the merits
of what we were doing, but it was a
slow process that unfolded and gathered
momentum over a number of years.
These days – largely as a result of these
early efforts on our part and that of
some of our like-minded competitors –
ILS is a much more accepted marketplace
and asset class among institutional
investors and their advisors.
The financial crash helped us
Strange as it may sound, the financial
crash spanning 2008 to 2010 benefited
us. Indeed, that we managed to survive
this painful episode largely unscathed
testifies to our model. We refer to this
period as the “proof of concept”, when
we demonstrated that we are indeed
uncorrelated to more traditional and
well-known financial markets. While
many industries fell to their knees during
this time, we held strong. It was after
this episode that we saw an acceleration
of investors coming on board, paving the
way for the Securis of today.
Regulatory matters
On the whole, we feel that regulations
have been helpful; indeed, they are
in some respects the reason that UK
“alternative asset” fund managers are
structured as they are. With particular
regard to the ILS business, other
jurisdictions such as Bermuda and
Guernsey offer taxation and regulatory
regimes which are especially conducive
to the carrying out of ILS investing
activities – which is why a large amount
of our business is supported via
structures residing in these places.
Being based in London while having
offshore entities in other countries is
a standard practice for companies like
ours, and we believe it has a beneficial
effect for our investors. Notwithstanding
this, we are especially excited about
the UK government’s recently enacted
ILS legislation which seeks to provide
a competitive onshore regime for ILS
businesses like ours in terms of structure,
regulations and taxation. This has to be a
major positive in our view – in relation to
our business, the ILS market in general,
and the UK’s prospects as a whole – given
the huge wealth of talented individuals
with reinsurance expertise working
here. These developments will be vital in
ensuring the UK keeps and strengthens its
position in this important global industry.
Changes in the global market
We feel very positive about the future.
As of now, the ILS involvement in the
insurance and reinsurance market is
only at a nascent stage. In much of
the developing world, many have not
yet insured themselves against natural
catastrophes. In fact, only roughly 30 per
cent of the damages caused by natural
disasters worldwide are paid for through
insurance. This is changing, however:
across the world, the developing nations
are becoming wealthier, and with this
trend will come a greater ability to insure.
As insurance of this kind increases, so too
will the market and, with it, our growth
prospects. This is yet another case of our
interests aligning closely with those of
the general public. As insurance covers
an ever-greater amount of potential
damages, fewer people and countries will
be left in a dire financial position.
What’s also encouraging is the fact that
we started this business with very little
presence in the reinsurance market, but
that we now have, along with our peers,
around a 20 per cent share. This is a
trend, moreover, that shows no signs of
deceleration. This testifies to the need
for businesses to be willing to take on a
certain degree of risk when starting up.
We knew that there was potential in this
area, and we knew we had the expertise
to take advantage of it. It was just a
matter of getting on and doing it.
ILS contributes a growing
proportion of claims costs after
major natural catastrophes
Across the
world, the
developing
nations are
becoming
wealthier, and
with this trend
will come a
greater ability to
insure
“
“
Rt Hon The Lord David Blunkett
Rt Hon The Lord Eric Pickles
