Credit Suisse ILS’ reinsurers Kelvin Re & Humboldt Re to stop writing

The two Guernsey domiciled, rated reinsurance carriers managed by and backed by capital from the Credit Suisse Insurance Linked Strategies Ltd. team, Kelvin Re and Humboldt Re, are not renewing any business this January and will stop writing.

We understand that the decision was taken at a Board meeting recently and staff at the reinsurance firms have been told in recent days, with Guernsey now set to lose two of its highest-profile ILS backed reinsurance carriers.

The shareholder and the Board of Directors of both Kelvin Re Limited and Humboldt Re Ltd. have now said that they have decided to cease underwriting new business for strategic reasons.

Both of the reinsurers, Kelvin Re and Humboldt Re, get their backing from insurance-linked securities (ILS) investors and funds under the management of Credit Suisse Asset Management’s specialist ILS investments unit.

Kelvin Re is backed specifically by investments made by the Abu Dhabi Investment Council, while Humboldt Re is backed by capital from some of the insurance-linked securities (ILS) funds managed by Credit Suisse Asset Management (CSAM).

The ultimate shareholder and the Board of Humboldt Re has revealed that the reinsurer will stop writing new business as of January 1st, 2021.

The reinsurer said that it is currently reviewing strategic options for the ultimate shareholder to unwind its investment in Humboldt Re.

The rated reinsurer holds a security rating from A.M. Best of A- with a stable outlook. So far this year, the company has gross underwritten premium of USD 109.3 million, with total assets of USD 1.021 billion.

“The company, which is underpinned by strong risk-adjusted capital, will continue to meet all its obligations in full compliance with the applicable laws and regulations and under the supervision of the Guernsey Financial Services Commission,” a statement explained.

Regarding Kelvin Re, it was decided by the shareholder and the Board at a meeting on December 2nd that, for strategic reasons it will also stop underwriting new business and pursue a controlled exit, so also will not be writing new reinsurance at January 1st it seems.

The reinsurer said that its business remains both solvent and strongly capitalised.

As at October 31st, 2020 the firm had net profit of USD 54.7 million and net assets of USD 991.5 million.

Back in April, rating agency A.M. Best highlighted the balance-sheet strength of each of the rated reinsurance vehicles, citing strong risk-adjusted capitalisation.

The reason for both rated reinsurers ceasing to write new business is unclear at this time.

Both had been hit by the heavy catastrophe losses of recent years, but it seems unlikely that losses would be the only reason.

It could be more to do with a consolidation of the structures through which Credit Suisse ILS access risk. We will update you if any further information becomes available.

This follows closely after the backing of the Arcus syndicate operations at Lloyd’s, that Credit Suisse previously suported with its ILS funds, was transferred to a new capital provider in ERS.

Also read: Strategic decisions by investors drove Kelvin Re & Humboldt Re shuttering: Credit Suisse.