Envelop Risk’s Capital Markets business continues to gain traction and the company is poised to deploy capital markets capabilities through its Augmented Re Class 3A reinsurer, said Co-Founder and Chief Executive Officer (CEO) , Jonathan Spry.
Cyber re/insurance underwriting company, Envelop Risk, launched its Capital Markets activity in 2022appointing David Ross, specialist in insurance-linked securities (ILS), as its head.
The practice has been established not only for underwriting transactions, but also for structuring and underwriting transactions on behalf of ILS funds.
More than a year after its founding, Artemis spoke with the company’s CEO about its progress and the broader ILS cyber space.
“It’s been very, very busy,” Spry said. “We are close to deploying the capital markets capacity that we plan to use in 2024.”
He explained that Envelop Risk is investing time with ILS funds and the broader capital markets, to determine what makes sense and what they are comfortable with, in terms of new ILS products.
The involvement of ILS funds and capital markets has been a hot topic for some time and are considered key players in the expansion of the cyber reinsurance market.
So far, there have been a few private cyber disaster bonds and there are also two full 144a transactions expected to close before the end of the year.
“The bottom line here is that ILS is not limited to cat bonds. Yes, we have seen a few cyber cat hops, but not a huge number,” Spry said.
“I actually expect the bulk of future ILS activity to be non-catalytic bonds, and probably more sidecars, aligned vehicles – that’s more what we’re looking at,” he said. -he adds.
This is where Spry expects capacity deployment to come from Envelop Risk’s aligned vehicle – Augmented Re – which is designed for client partnership.
“But also, within Lloyd’s there’s London Bridge and so on, so we don’t necessarily see a real need to use the catalytic bond structure. There are many ways to engage financial markets,” Spry said.
As the need for cyber reinsurance and retrocession increases, Envelop Risk’s data-driven approach, cross-functional expertise within the firm and across its Capital Markets business, will help the ILS investment community have confidence in its understanding of risk as it continues to evolve.