Hyperion X and Vario Partners to deliver collateralised, whole account cover to clients

Hyperion X, the technology and analytics division of Hyperion Insurance Group, and Vario Partners LLP (“Vario”), the leading innovator in collateralised reinsurance structuring, are partnering to assist clients through this period of uncertainty with collateralised, whole account stop-loss reinsurance cover.

Backed by Hyperion X’s market-leading analytics, Vario’s unique approach to aggregate, multi-year stop-loss reinsurance will be deployed in the provision of scalable, investor-backed capacity. While financial markets continue to react to the spread of the coronavirus, economic recession, and increased credit risk, there is growing demand for less exposed, non-cyclical products.

The exhibits below show how carrier financing costs are rising in a time of heightened retrocession costs. Whole account risk transfer insurance linked securities are an attractive contingent capital alternative in this environment.

In addition to improving regulatory solvency ratios, Vario’s risk transfer mechanism brings greater certainty to (re)insurers’ technical results, thereby reducing costs of capital and enhancing franchise value.

Bryan Joseph, founding partner, Vario Partners LLP commented: “Whole account risk transfer insurance linked securities meet the needs of insurers and reinsurers seeking to reduce underwriting and credit concentration risks. We believe that including a layer of contingent capital in a reinsurance structure provides companies with enhanced shareholder returns and protection in those years when an accumulation of events and reserve development can impair shareholder value.”

Chairman of Hyperion X’s sister company RKH Reinsurance Brokers, Elliot Richardson, said: “This important collaboration makes new capacity available at a time when reinsurance and retrocession cover, particularly whole account stop-loss, is at or near all-time lows.”

David Flandro, Managing Director, Hyperion X Analytics added: “This structure uniquely benefits earnings volatility and balance sheet strength at a time when retrocession rates-on-line have increased, and carrier financing costs are rising sharply. We are bringing this to market now to give (re)insurers access to a new source of stable, competitive capacity during this volatile period which enhances balance sheet strength for future profitable growth.”