Jarad Madea on M&A and capital markets innovation replacing tradional reinsurer formations with AM Best TV

“I think we’re going to see a fair amount more of carrier consolidation, whether that’s acquisitions, true mergers of equal, or other.”

Jarad Madea, CEO of Howden Capital Markets and Advisory, spoke with Richard Banks of AM Best TV at the Rendez-Vous de Septembre conference in Monte Carlo about capital markets innovation replacing traditional reinsurer formations.

Jarad detailed how modern structures, such as sidecars and cat bonds, enable faster market entry.

“The world continues to be a very risky place. When you think about social inflation, climate change, the geopolitical situation around the globe, there’s a lot of risk out there, some known, some unknown and there’s a lot of change.”

While the speed of capital entering the market increases, investors are increasingly coming in to play in the market in shorter-term balance sheets. Jarad said this is one of the key reasons why we’ve seen innovation with capital.

“The peak pricing has started to come down and that being said, which I think we agree, the important part is that the market is still at attractive levels. There are still attractive returns to be had for the primary insurers, for reinsurers, for ILS managers, and for other end investors across the system.”

Jarad explained that it’s likely to see more M&A. He said if you were to look at a broad, public company index of insurance carriers today, many are trading at or near 10-year highs with good currency, excess profits/capital, and are in a good position to both want and need to acquire if organic growth starts to slow.

On the other hand, potential sellers may see that their growth prospects aren’t as strong in a hardening market.

“I think we’ll start to see and feel the need for M&A and more consolidation on both the carrier side, buyers and sellers.”

• Find the full interview here:
  AM Best TV
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