Capital markets capacity is now an integral part of the reinsurance market, Guy Carpenter vice chairman David Priebe said as the 2012 Monte Carlo Rendez-Vous prepares to open tomorrow morning.
"All distinction between traditional and non-traditional sources of capital is redundant," he said. "The market has converged."
Buyers are now using alternative covers such as cat bonds or industry loss warranties as core parts of their reinsurance programme not "ad-hoc fillers", Priebe said, estimating that the market will provide $34bn of property risk capacity this year - almost 15 percent of the total $240bn market.
Guy Carpenter picked up capital markets as one of the areas of opportunity for the broking industry.
"The convergence capital markets are the natural home of the broker," Priebe argued, noting that the major brokers source cover across the full range of reinsurance products.
Guy Carpenter's president and CEO Alex Moczarski summed up the reinsurance environment as stable, if challenging.
With high excess capacity in the market, the broker forecast some downward pressure on pricing going into next year, assuming there are no significant cat losses.
Among the other opportunities highlighted by the broker, Nick Frankland, Guy Carpenter's CEO of Europe, Middle Eastern and African operations, picked out the life reinsurance market as a target within his region.
Only about 5 percent of this niche market is broked and a third is transacted in Europe, he noted.
Finally, CEO of Asia Pacific James Nash pointed out that the loss experience of 2011 had focused interest on the need to understand non-modelled perils such as flood, where the firm is investing in models.
The firm continued to see the diverse region as attractive as new reinsurance capital flowed into the market.