PartnerRe to look at issuing catastrophe bonds or using a sidecar

PartnerRe CEO Costas Miranthis was interviewed at the recent Bermuda Captives Conference by AM Best to discuss the company’s strategy six months after he became CEO and a number of key management changes were made. The interview, which you can read about and view a short video of here (via Comtex), gives an interesting insight into the way the company may be moving.

In the interview Miranthis discusses the way the company writes reinsurance and uses retrocessional coverage itself and said that they need to “evolve” and are open to methods that previously they may not have used. He said “We’re prepared to look at things, like issuing a cat bond, or doing a sidecar or making more strategic use of retrocession, that we never looked at before.”

PartnerRe have not issued a catastrophe bond or indeed any insurance-linked security before and as far as we know their use of sidecar’s has been minimal. They are however, like many reinsurers, actively investing in ILS and cat bonds and have been hit by losses to their portfolio due to the Japanese earthquake and appear to be expecting further losses from recent tornadoes in the U.S.

Miranthis acknowledged in the interview that the company didn’t look at those type of strategic risk transfers before but are now prepared to look at them on their merits. He also said that they were not sure whether they would actually use any of those methods but are looking at them and when discussing clients added “We need to find new ways to structure risk. We need to find new ways to provide the coverage they need. We’re here to share the risk more broadly”.

It’s an interesting and candid interview from the CEO of a major reinsurer and encouraging to hear that PartnerRe are actively looking into the alternative risk transfer market more deeply than before.