As new capital flows into the market from increasingly diverse sources, including hedge funds, pension funds and catastrophe bonds, a number of reinsurance companies have appointed senior executives to evaluate the changing landscape.Arch, Argo, Axis, Catlin, Everest Re, Partner Re and XL are among the firms to have done so recently, according to a newly released report by reinsurance broker and capital advisor Aon Benfield.In its half-yearly Aon Benfield Aggregate (ABA) report, it notes that hedge funds and pensions funds are being attracted to reinsurance as an asset class “because it has performed relatively well in an environment of low interest rates and has limited correlation with broader capital market movements”.Global reinsurer capital increased by $50 billion year-on-year at the end of 2012 to stand at a new record level of $505 billion. The report states this was driven by a combination of solid earnings for reinsurers, unrealised investment gains and “a continued flow of new capital entering the industry in support of rated start-ups and the ‘non-traditional’ sector”.Catastrophe bonds currently make up an estimated $18 billion of reinsurance risk capital. Bermuda has attracted around one third of the global cat bond market, the most recent addition being the $250 million Citizens Everglades Re 2013, which was listed on the Bermuda Stock Exchange at the end of March.Cat bonds, along with industry loss warranties, are among the insurance-linked securities (ILS) carrying new capital into the reinsurance sector. Specialist fund managers are guiding this new capital into ILS and other non-traditional reinsurance structures such as sidecars and collateralised reinsurance, notes the ABA report.“Having the capability to attract and deploy third party capital is becoming important for companies wishing to grow their footprint in the reinsurance market (without taking additional peak risk), diversifying their income streams (reducing earnings volatility) and actively manage their capital base,” states Aon Benfield.The report goes on to list a number of companies that have made senior executive appointments with a view to evaluating “potential threats and opportunities” presented by these new capital flows.Aon Benfield sees heightened convergence of the capital market and “the beginnings of a true rotation in how the reinsurance business will be capitalised”.In its executive summary it reports: “New income streams and operating advantages are starting to flow to leading reinsurers that have engaged with new capital flowing mainly from pension funds, life insurers, endowments and high net worth individuals.“Their roles are mainly in: (a) managing bond funds where reinsurers have relationships and familiarity benefits with bond sponsors, (b) sharing quality underwriting performance and access to mature reinsurance and insurance relationships through sidecars and other managed vehicles and (c) sponsoring catastrophe bond transactions to lower their weighted average cost of underwriting capital, particularly for peak modelled perils.”