Resolute Global Partners Launches Footprint, Completely New Type of Reinsurance Contract

Rhea-AI Summary

Resolute Global Partners has launched Footprint, a groundbreaking reinsurance contract developed with Gallagher Re and Karen Clark & Company. This innovative solution addresses longstanding issues in the reinsurance industry, such as trapped capital, pricing uncertainty, and non-modeled risks. Footprint can be applied to various natural disasters, initially focusing on severe convective storms, which are notable for their high costs to insurers. The contract features rapid claim settlements within 30 days and automatic commutation after contract maturity. This product aims to provide better coverage and liquidity for insurance companies while offering investors an efficient entry into the property reinsurance market. Industry leaders express optimism that Footprint can transform the reinsurance landscape, especially amid the current favorable rate environment.

Positive

• Launch of innovative reinsurance contract 'Footprint' addressing market needs.
• Features rapid claim settlements within 30 days post-event.
• Enhances liquidity for insurance companies and investors.
• Offers cost-effective coverage compared to traditional contracts.

Negative

• None.

Innovative product, focused on U.S. natural catastrophes, employs highly advanced modeling technology to deliver solutions to insurance companies and investors

HAMILTON, Bermuda, April 13, 2023 /PRNewswire/ -- Resolute Global Partners, an investment advisor specializing in insurance and reinsurance, today announced the launch of Footprint, a brand new type of reinsurance contract, which the firm created in collaboration with global reinsurance broker Gallagher Re and leading catastrophe modeling firm Karen Clark & Company (KCC).

Footprint's innovative structure solves a number of problems that have vexed the reinsurance industry since 2017.

Footprint can be used for any type of catastrophic event, from severe convective storms and wildfires to hurricanes and earthquakes. The first Footprint transaction is focused on severe convective storms, among the most common, most damaging natural catastrophes in the U.S. These storms, which can include tornadoes, hail, and high winds, have been one of the costliest perils for insurance companies. As a result, insurance companies are demanding more coverage while reinsurers are limiting supply, a dynamic that highlights Footprint's value in the market.

Footprint's innovative structure solves a number of problems that have vexed the reinsurance industry and its investors since 2017, including trapped capital, extended settlement times, economic inflation, social inflation, non-modeled risks, and pricing uncertainty. The product's benefits include rapid claim settlement (within 30 days of an event); automatic commutation (within 30 days of contract maturity); and fixed exposure risk. Unlike other products such as parametric triggers, industry loss warranties and cat bonds, this approach provides a more accurate assessment of storm losses than what is currently available, giving insurance companies cost-effective coverage and critical liquidity post-event while also offering investors a more efficient way to access the property reinsurance market and earn attractive returns.

Tom Libassi, Co-Founder and Managing Partner of Resolute Global, said, "We're proud to lead the market with another innovative insurance solution. Footprint gives investors the opportunity to capitalize on the current attractive rate environment – freed from the problems the industry has been grappling with over the past several years. Given the much-improved structure, terms, and pricing that Footprint provides to insurance companies and investors compared with other contracts, we believe this product has the potential to transform the reinsurance industry."

This transaction, and its future applications, are enabled by KCC's advanced catastrophe modeling technology. For severe convective storms, the KCC model ingests more than 30 gigabytes of atmospheric data from satellites, global weather models, and radar each day, which are used in complex scientific algorithms to create high-resolution hail and wind intensity footprints. These footprints are then superimposed on a portfolio of properties to estimate the resulting losses.  

Speaking to the product's first transaction, Karen Clark, CEO of KCC, said, "Severe convective storm losses dominate weather-related property claims in the U.S., and KCC has invested substantial resources to develop the most advanced and accurate models. We're thrilled to be working with Resolute Global to bring to the market this innovative transaction providing substantial cover for severe convective storm losses along with a transparent, timely, and highly efficient way for investors to access the market."     

Doug May, President, Gallagher Re North America, said, "We are pleased to have advised Resolute Global on this innovative reinsurance contract. In this challenging marketplace, we believe this new product will help expand the sources of capacity for our clients."

Footprint's process is straightforward: An insurance company submits its exposure file, which is then fixed at the inception of the contract. In the event of a covered event, KCC will overlay the intensity footprints on the insurance company's fixed exposure profile and determine the company's ultimate loss. The loss, as determined by the model, is paid to the insurance company within 30 days. The contract is automatically commuted within 30 days of maturity, allowing investors to receive their original investment plus any profits, or less any losses, immediately.

About Resolute Global Partners
Resolute Global is an employee-owned, SEC-registered investment advisor that finds and supports niche opportunities in the insurance and reinsurance market by leveraging its strong relationships, underwriting and actuarial experts, and market knowledge. The firm partners with insurance providers to design innovative solutions and builds long-term value for its investors by creating a diversified portfolio of [re]insurance risks uncorrelated with traditional assets. Founded in 2011 as ILS Capital Management, Resolute Global has offices in Hamilton, Bermuda; London; Stamford, Connecticut; Chicago, Illinois; and Jacksonville, Florida. For more information, please visit www.resolutegp.com.

About Gallagher
One of the world's largest reinsurance brokers and advisory firms, operating across the risk and capital spectrum with a team of over 2,600 in over 30 countries, Gallagher Re is part of Gallagher, the global brokerage, risk management and consulting services firm (NYSE: AJG) headquartered in Rolling Meadows, Illinois. Gallagher Re prioritises clients advocacy above all else and offers clients a powerful combination of global and specialist expertise and geographic reach. By combining world-class analytics capabilities with reinsurance expertise, strategic advisory services and transactional excellence, Gallagher Re helps clients drive greater value from their businesses, negotiate optimum terms and make better reinsurance decisions. Its global client base includes all of the world's top insurance and reinsurance carriers as well as national catastrophe schemes in many countries around the world. For more information visit www.gallagherre.com.

About Karen Clark & Company
Karen Clark & Company (KCC) provides advanced models, innovative software, and comprehensive consulting services for deeper insight into climate, weather, and catastrophe risk. KCC professionals are globally recognized experts in advanced modeling and risk management who work with company executives to enhance business strategies, competitive advantage, and financial results. KCC models cover tropical cyclones, extratropical cyclones, severe convective storms, winter storms, wildfires, floods, and earthquakes in over 80 countries. For more information, please visit www.karenclarkandco.com. 

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SOURCE Resolute Global Partners

FAQ

What is the Footprint reinsurance contract launched by AJG?

Footprint is a new type of reinsurance contract developed by Resolute Global Partners in collaboration with Gallagher Re and Karen Clark & Company, addressing critical issues in the reinsurance market.

When was the Footprint reinsurance contract launched?

The Footprint reinsurance contract was launched on April 13, 2023.

What are the benefits of the Footprint contract for AJG investors?

The Footprint contract provides investors with efficient access to the property reinsurance market and offers attractive returns while solving issues like trapped capital.

How does the Footprint contract improve reinsurance claim processes?

The Footprint contract allows for rapid claim settlements within 30 days of a catastrophic event, streamlining financial recovery for insurers.

What types of events can the Footprint contract cover?

Footprint can cover various catastrophic events, including severe convective storms, hurricanes, wildfires, and earthquakes.