(Photo credit: Dibyendu Ash.)
TigerRisk Partners LLC, a Stamford, Conn.-based risk/capital management and strategic advisory firm has transacted the first ever electronic secondary reinsurance trade using Xchanging’s X-gRm platform, according to a statement released by Xchanging. The vendor characterizes the expanded use of X-gRm to the secondary marketplace as a significant step and says that it expects that it will become an integral facility of the platform.
Executing secondary reinsurance trades in a live market environment provides a host of benefits, according to Rod Fox, CEO, TigerRisk. “It adds liquidity, increases volume and speeds transactions—something we’ve been wanting to achieve in catastrophe reinsurance for a long time,” he comments. “In addition, it opens an easy-to-access, pre-qualified channel for buyers.”
Accessing the secondary market through X-gRm may also be attractive to buyers looking for a quick and easy way to participate in reinsurance risk, according to the Xchanging statement. “In this case, the trade was for the last year of a three-year contract,” explains TigerRisk’s Fox. “All the analytics and due diligence had already been completed. The risk was very well defined and provided on X-gRm.”
Xchanging opines that development of the secondary market will benefit buyers and sellers alike. “Buyers gain the ability to quickly and efficiently trade in and diversify their portfolios. Sellers, meanwhile, benefit from an easy way to trade out of a position and seek a better allocation of their capital,” the compay’s statement says.
Xchanging reports that since X-gRm’s release in March 2015, over 750 users from 130 reinsurance carriers have signed onto the multi-broker platform, which the vendor characterizes as providig a simple, secure and auditable environment for reinsurance transactions.
Pure Derivative Market for Insurance
The platform provides reinsurance markets a single online repository for brokers to distribute offers, submissions and information such as exposure data, analytics and terms and conditions all in one place, according to Xchanging. A built-in analytics tool enables buyers to ‘triage’ an offering to ensure it conforms to their risk appetite, the vendor adds.
Fox notes that creating a secondary trade marketplace on X-gRm is only the first step. “Ultimately, I believe this will lead to the development of a pure derivative market for reinsurance,” he says.