Alternative capital deal-maker of the year: PCS, Verisk

PCS wins the alternative capital award for the second year running, with its focus on specialty risks. Last year saw a wide variety of losses in marine, energy, cyber, and political violence. As a result, specialty industry loss warranties (ILWs) became crucial to the global reinsurance market, and few stood out as much as PCS in this area.

Tom JohansmeyerIn addition to helping companies access risk transfer capacity where none might have been available otherwise, PCS industry loss indices for specialty lines helped reinsurers engage with the insurance-linked securities (ILS) market. ILWs for both standalone specialty classes and composite structures helped reinsurers gain access to the protection they needed, which may prove relevant given the ongoing conflict in Ukraine.

Reports of rising losses in Ukraine and Russia for aviation, onshore energy (including nuclear and renewables), marine (including potentially ports and terminals), and various forms of political violence could make specialty ILWs especially relevant in 2022.

The PCS global specialty platform provided an alternative to informal and ineffective loss reporting agents for specialty ILW transactions, making reliable access to specialty retro possible during a year when the industry clearly needed it.

PCS's specialty lines indices also enabled buyers to engage with the ILS market, resulting in fresh capacity for the retro demands that had grown alongside the overall market. The indices were used in several transactions in 2021.

"Quoting activity for global terror ILW business was more active than PCS has seen in at least a decade, which means it's probably more active than ever before, and the same could be said for marine and energy," says Tom Johansmeyer, head of PCS.

PCS has helped clients develop robust trigger approaches to cyber and nuclear, biological, chemical, and radiation exclusions in global terror ILWs, as well as working on prospective cyber ILW transactions.

The company also launched PCS Global Aviation in the Q4 2021.

PCS's successful specialty lines retro ILW transactions in 2021 have provided the foundation the industry needs in 2022 to continue to gain access to ILS capital during a period of profound uncertainty and demand for protection. And with such uncertainty in the market, this may be one business likely to grow further in the future.