Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Focus shifts to private ILS at SCOR Investment Partners, adds portfolio managers


The insurance-linked securities (ILS) investment unit at SCOR Investment Partners has strengthened its team with the addition of Sidney Rostan and Pierre Mouilhade as portfolio managers, as it plans to increasingly focus on private ILS and collateralized reinsurance.

The ILS management team at SCOR Investment Partners (the third-party asset management unit of global reinsurance company SCOR) currently looks after approximately $500m of insurance and reinsurance linked assets, across catastrophe bonds and private collateralized reinsurance and ILS deals.

Speaking to Artemis, Head of the ILS team at SCOR Investment Partners Vincent Prabis, explained that the new hires are part of a shift in focus, towards more capital allocated to private ILS transactions and collateralized reinsurance deals, given the evolution of the ILS asset class and the current soft market conditions.

He said; ” As a reinsurer, looking at ILS, the only thing you could do was investing in cat bond to begin with. When you had the opportunity to get out of the cat bond space you were way too concentrated and too dependent on cat bonds.”

“Our view was always that we needed to deploy our investors’ capital into collateralized reinsurance and retrocession. Current market conditions are now supporting our view that for investors who don’t have liquidity constraints, or who already know and appreciate this asset class, these OTC and less liquid transactions can make a more suitable portfolio.”

This shift is being seen across the ILS management sector, as market conditions and lower returns in the catastrophe bond space, guides that managers should focus on reinsurance deals for greater access to risk and return.

For Prabis, the direction an ILS manager takes should also be guided by its investors as it depends on their education level and their appreciation of ILS strategies which can be more or less liquid.

Strategies rather liquid remain more appropriate for less experienced investors. Those with some history of investing in ILS are more likely to appreciate the better returns of a private transaction focused, sometimes more concentrated portfolio, he explained.

Prabis continued; “More experienced investors do see the benefit in reducing the cat bond portion of portfolios. Hence we are launching new strategies that we present to experienced investors with portfolios focused on private ILS.”

It is worse mentioning that in order to access the best risks greater sourcing, origination and underwriting expertise is required from ILS managers. Hence we’ve seen a significant amount of hiring in the market in recent months, something SCOR Investment Partners has embraced with its two new portfolio management hires.

Sidney Rostan joins SCOR Investment Partners as ILS Portfolio Manager following nine years at French investment bank Natixis, here he led the ILS business. At Natixis, Rostan worked on origination, structuring and placement of catastrophe bonds and private deals. Prior to that Rostan worked at Marsh, where he created and developed a practice focused on cat bond and European weather risk management activities.

Rostan’s experience in the collateralized reinsurance and private transactions area of ILS is expected to benefit the team, as it seeks to achieve this shift in focus. Rostan will report directly to Prabis.

Pierre Mouilhade joins the team as ILS Analyst-Portfolio manager. Mouilhade joined from AXA, where he was head of the team modelling Complex Risks in the insurers Group Risk Management department. Prior to that Mouilhade worked at Calyon as a proprietary derivatives trader from 2007 to 2012. He will also report to Vincent Prabis.

The SCOR Investment Partners ILS team is composed of five dedicated professionals, led by Vincent Prabis, Head of ILS, with new hires Sidney Rostan, ILS Portfolio Manager, and Pierre Mouilhade, ILS Analyst-Portfolio Manager, as well as Grégory Scheffer, an ILS Analyst, and Edern Le Roux, an ILS Risk Manager

François de Varenne, Chief Executive Officer of SCOR Investment Partners, commented on the hires; “These recruitments form part of the expansion of the asset management company SCOR Investment Partners towards third-party investors. At the crossroads between financial management and reinsurance, Insurance-Linked Securities enable institutional investors to reconcile diversification and risk control.”

Vincent Prabis also stressed that “being part of the SCOR group is a strong advantage as clients understand that we are able to leverage certain aspects of SCOR’s scale and expertise, such as risk modeling, actuarial and legal services.”

“The investors we talk to, who understand that the asset class is a long-term play, understand that the behaviour you must have to be a permanent participant in the space is different to the more speculative capital markets approach. Being backed by a leading European reinsurance company helps investors to understand this,” Prabis said.

He continued; “When we face cedents now they do understand very well that we are closer to the reinsurers view of the market than a standalone ILS fund.”

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