The growth of alternative sources of capital — such as catastrophe bonds — in the reinsurance market can be complementary to traditional reinsurers, rather than being regarded as a threat.That is the view of Stephen Young, chief underwriting officer and head of global catastrophe at Bermuda-based Endurance Specialty Holdings.Aon Benfield reported last week that cat bond issuance hit $6.43 billion in the first half of this year, up more than $2 billion on the same period last year and are filling a growing portion of the property catastrophe market.In an interview in Monte Carlo, where he is attending Rendez-Vous, the reinsurance industry’s annual get-together, Mr Young said traditional reinsurers remained attractive to clients as they offered many things that cat bonds may not.“We did see some sidecars coming into the US market this year, providing capacity in very small scope, for Florida high-rate, online layers,” Mr Young said.“But for us at Endurance it was great to see clients in Florida, saying ‘we like the traditional market, we like Endurance as a long-term partner’.“And they actually ended up placing more business with us.”The relationship between traditional reinsurers and alternative providers would evolve over time, he said.The impact of the new capital coming in had been felt in the reinsurance market, but not in a significant way, he said.“What we’ve seen is that with $100 billion-plus of losses last year, rate increases were muted and not as large as they could have been if the alternative capital hadn’t been there,” Mr Young said.“But maybe everything, going forward, will be more muted — the peak and the trough.“It’s very similar to when capital came into hard markets in the past, like when Endurance was started in 2001 and when the Class of 2005 was launched, and people were then saying the same thing about impact on pricing.”After last year’s huge losses, there was no wave of new companies setting up in Bermuda in the way that has happened repeatedly in the past.Mr Young views insurance-linked securities (ILS) like cat bonds as focusing on niche areas of the reinsurance market, while traditional reinsurers still dominate the rest.“We don’t really view it as a threat — to some extent, we see it as complementary,” he said.“At Endurance, we focus on long-term relationships with clients and provide a lot more than these short-term capital needs.“We provide a product that provides reinstatement that typically cat bonds do not.“We provide technical underwriting expertise, analytical expertise and claims expertise that these sidecars, cat bonds and the collateralised market find it more difficult to provide.“And we’ve been doing that for ten years now.”Endurance has also utilised alternative capital sources in writing property catastrophe quota share business.Many of the new cat bonds have been set up in Bermuda, which provided a sound regulatory framework for these structures with the “special purpose insurer” classification introduced late in 2009.Since then, the Bermuda Stock Exchange has listed more than $5 billion in ILS, attracting business that had predominantly gone to Cayman in the past.This was a sign of the Island’s continuing strength and relevance in the industry, Mr Young said.So does Endurance have any plans to follow others who have moved their holding companies from Bermuda to Europe?“We have no plans to change anything,” Mr Young, a Bermudian like his CEO David Cash, said.“In Bermuda, there is a strong concentration of underwriters, which is great for our business and great for the market.”