Pool Re appoints AON Securities and Howden Capital Markets as advisors for insurance linked securities

Pool Re, the UK-based terrorism reinsurer, has announced the appointment of Aon Securities Limited and Howden Capital Markets and Advisory as its new insurance linked securities (ILS) advisors. 

As the only government-backed terrorism reinsurer in the UK, Pool Re is responsible for making sure there’s enough money to cover damages if a terrorist attack occurs in the UK. Their decision to work with AON Securities and Howden Capital Markets comes after a thorough tender process. 

ILS allow insurers and reinsurers to transfer large-scale risks, such as those posed by terrorism or natural disasters, to the capital markets. By doing so, they can access additional funds from investors willing to take on this risk in exchange for a potential return. This approach provides an alternative to traditional reinsurance, offering enhanced financial resilience in the face of significant events. 

Pool Re has a history of employing ILS solutions to complement its reinsurance programme. In 2019 and 2022, they raised a total of £175m through catastrophe bonds (or “cat bonds”) which are a type of ILS, issued by a company called Baltic PCC Ltd. 

Exploring all avenues for risk transfer 

Both Aon Securities and Howden Capital Markets bring extensive expertise in the structuring and placement of ILS. 

Tom Clementi, chief executive officer of Pool Re, commented, “Pool Re considers all forms of risk transfer capacity in its reinsurance programme and has appointed the advisors to assist in the evaluation of potential ILS and similar solutions for the ultimate benefit of protecting UK taxpayers.” 

The strategic use of ILS could provide Pool Re with additional layers of financial protection. By engaging these advisors, Pool Re aims to ensure that its reinsurance programme remains robust and capable of responding to the evolving risk landscape. Ultimately, this means that if something bad happens, the UK taxpayer won’t have to bear the cost. 

As the global risk environment continues to evolve, the integration of innovative financial instruments like ILS into traditional reinsurance programmes will likely become more prevalent. 

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Josie Geistfeld Josie is an editor for Claims Media. She welcomes feedback, comments, and opinion at josie.geistfeld@barkerbrooks.co.uk