Yesterday our partner Roberto Panucci moderated the Insurtech Brasil panel "Estruturas de Capital e Resseguro em Novos Negócios: Como Atingir Escala sem Consumo Exagerado de Capital" [Capital and Reinsurance Structures in New Businesses: How to Achieve Scale without Excessive Capital Consumption], alongside Danilo Soares (Pottencial) and Pedro Sampaio (Munich Re).
The starting point of the debate was direct: growing in insurance is, first and foremost, a capital problem. Every new policy consumes regulatory capital, and the speed at which an operation scales depends less on commercial appetite than on how intelligently it structures cession, retention and alternative capital.
"Resseguro deixou de ser apenas uma ferramenta de gestão de risco e passou a ser, para o novo entrante, uma forma de gestão capital." [Reinsurance is no longer just a risk management tool; for new entrants, it has become a form of capital management.]
The conversation covered the daily trade-off between growing and preserving capital, the menu of reinsurance solutions and the role of LRS (Insurance Risk Notes) as a complementary instrument for transferring risk through the capital markets.
For new insurers and for APPMs (mutual asset protection administrators), it is precisely this tripod, own capital, reinsurance and alternative capital, that makes it possible to get off the ground without compromising solvency in the first years of operation.
The message for those structuring a business from scratch was clear: design the capital structure before the product, not after. Reinsurance, retention and alternative capital are design variables, not last-minute adjustments.
Our thanks to Insurtech Brasil for the invitation and to the panelists for the high-level exchange.
The event was also attended by the following members of the firm: Daphne Minerbo, Marcelo De Callis and Fernanda Rangel
