In the aftermath of Hurricane Andrew’s $15.5 billion in insured losses in 1992, insurance-linked securities emerged to distribute a portion of future property-catastrophe risk to investors. At the time, industry players contemplated the possibility of similar securitizations for casualty risks, but there was no Big Bang like a hurricane demanding a new source of risk-bearing capacity.
Executive Summary
"We started this because people said it couldn't be done." That's the simple reason that Ledger Co-Founder Samir Shah shared with Journalist Russ Banham to explain the makings of Ledger Investing, a platform in which four casualty insurance risks are securitized and transferred to capital markets investors. Here, Banham provides more of the backstory of Shah's career and the building blocks of the platform that already has placed more than $300 million of gross premiums into the capital markets.Even if there were, it would be difficult to persuade investors to bet on a risk that was opaque and challenged by scant and unreliable data, despite the opportunity to diversify investment portfolios with these uncorrelated probabilities. The foregone conclusion was that an ILS market that assumed casualty risks was a solution in search of a problem.
Samir Shah had other ideas. In 2017, Shah co-founded a platform called Ledger Investing, in which four casualty insurance risks—private passenger automobile, workers compensation, commercial automobile and general liability—are securitized and transferred to capital markets investors. Two years later, Ledger announced its first transaction.
