The Cinderella Story

With the title of this post I refer not to the beginning of the college basketball tournament in the U.S. which begins today and is known for the "Cinderella stories" of overachieving college teams, but rather to a story in today's Advisen Front Page News quoting Lord Levene, Chairman of Lloyd's.



Levene hits on two of my favorite themes about Lloyd's - the need for paperless processing (see my posts on the subject here) and the tension among old and new capacity providers at Lloyd's in today's soft market (see my recent post here).



In discussing how progress has been made in ending the van runs from Lime Street, Levene notes that there is a long way to go before paperless processing is a reality and hints at the fact that the insurance industry could be at a competitive disadvantage to other capital providers such as the investment banks pouring money into the industry and securitizing policies. I love this quote from Lord Levene:

'If we are to end our status as a Cinderella industry we have to improve
the quality of our systems.'

Advisen has invested in Web Connectivity which enables paperless processing through its award-winning ACORD messaging gateway EnabledB2B.



And answering the complaints (of Mr. Hiscox and Mr. Catlin) about allowing new money into Lloyd's, in affirming how Lloyd's has agreed to manage the cycle through the Franchise Directorate, Levene said:

'I think there is an extreme lack of candor in this industry.'

The story can be found here.

Capital Markets & (Re)Insurance - Unstoppable Momentum?

Some further data highlighting how the convergance of the capital markets and the (re)insurance industry is picking up steam:

According to today's edition of Trading Risk, 2007 Catastrophe Bond issuance was 49% above 2006 issuance and 251% above 2005 issuance.

Also in the news today, Lehman Brothers, which reports (here) 70% market share in issuance of US Life Insurance, Reg XXX/AXXX/Embedded Value insurance linked securities and claims to be the "leading trader of catastrophe bonds in the secondary market", hired Stephen Matanle from Marsh.

Steve was very senior at Marsh and had a long and distinguished career of 32 years with Marsh including (from the press release) "the role of Global Placement Leader. He had previously been Chairman and CEO of Marsh Global Broking."

Last fall Lehman launched Libero Ventures which markets itself as leading the charge in "Reinsurance Financing" which it defines here. The main points of differentiation are in the structure (cedants can opt for multi-year deals and take an equity stake in the Notes created by Lehman) and the origination (Lehman Re acting as principal to speed the process).

As Michael Spencer, ICAP's founder and CEO, pointed out in Trading Risk, the secondary market for these instruments must become more liquid, but tapping Matanle and his proven deal-making ability is big news for Lehman and the whole new issue market of insurance-linked securities.