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Ariel Re developing excess-of-loss cyber offering

Active underwriter says as the cyber market continues to grow, capacity for quota-share and stop-loss products is not going to be enough to meet demand

Reinsurer is also working on a cyber ILS structure

Ariel Re is developing an excess-of-loss cyber reinsurance product as it looks to expand into the line.

Speaking to Insurance Day at the Monte Carlos, Rendez-Vous, Darren Lednor, active underwriter at Ariel Re, said an excess-of-loss product was a “better way” of controlling of volatility than quota-share or stop-loss structures. 

“Traditionally there have been two [reinsurance] products out there – being quota-share and stop-loss – in the market, very little excess-of-loss. As the market’s growing, we only see the cyber market continuing to grow in the next three to five years,” he said.

Lendor continued: “The capacity for those products is not going to be enough and, as with property as it’s developed over time and become a more significant market, excess-of-loss is going to be a much better ways for people to start to control the potential volatility that’s there.”

Ariel Re is also looking to attract third-party capital to back a cyber insurance-linked securities (ILS) structure. 

“A lot of the ILS capital at the moment has been very focused on property and is keen to find other pockets of different lines of business they can write,” he said, adding the reinsurer was trying to design a cyber product with a shorter tail, which would be more attractive to the ILS market.

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