Revolutionizing the reinsurance industry

Vesttoo uses a proprietary AI-based technology platform to facilitate risk transfer of life and P&C insurance liabilities between insurance companies and institutional investors, providing a growing flow of capacity for insurers while facilitating insurance-linked investments for asset managers. As the first independent platform to provide institutional investors direct access to this type of alternative investment, the firm handles every aspect of the deal, from objective risk assessment and expected loss projections to the structuring and monitoring of the transaction.

Insurance-linked assets provide a way for insurance companies to transfer a portion of their risk and premiums to the capital markets, which allows investors to participate in the reinsurance market. This emerging asset class gained traction in 1992 after Hurricane Andrew, which cost the reinsurance industry an estimated $15.5 billion.

Catastrophe bonds have dominated the insurance-linked securities (ILS) space, but higher than expected losses and volatility have cooled investor appetite. Non-catastrophe offerings from the life and P&C sectors are increasingly attractive to investors seeking highly predictable, uncorrelated returns. Today’s technology can more accurately model these risks, using the large amounts of data associated with these high-frequency, low-severity insurance liabilities such as motor liabilities, D&O, general liabilities and more.

Vesttoo entered the reinsurance industry after using AI technology to create an objective and accurate process to model the various liabilities that could be used to create assets investors could buy. Before settling on the reinsurance industry, the firm looked at multiple markets with funding gaps, including commodities, energy and real estate.

“It was clear to us that the most burning need was in the reinsurance space,” says Bertele. “The market is huge: It’s estimated that hundreds of trillions of dollars of liabilities could be hedged to reinsurance capacity.” Bertele says that he wants Vesttoo to become “an eBay or Amazon Marketplace or a stock exchange for the reinsurance industry.”

Diversifying with Insurance-Linked Assets