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Reduce, Reuse, Recycle: How to Use Capital Efficiently

The spectre of trapped capital has heightened the desire for efficiency, according to a panel discussion during ILS Bermuda’s Convergence conference.

There are various ways to manage capital efficiently and thus calm the nerves of an investor in insurance-linked securities (ILS). According to Michael Hamer, partner and senior analyst at Albourne, this topic has become a focus for investors because, over the last four or five years, substantial amounts of invested capital has become ‘trapped.’

As moderator of the panel “Reduce, reuse, recycle” at ILS Bermuda’s Convergence conference, Hamer began with a positive message.

“A number of managers and service providers have been very active in trying to develop ways of making the investments more efficient. One of the areas that in particular has really grown quite rapidly is providing investors with a significant amount of non-recourse leverage through the use of rate and balance sheets, and tail hedges,” Hamer said.

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