Hannover Re’s role in the insurance-linked securities (ILS) market continues to be a significant contributor to the reinsurance firms earnings, with 2019 looking set to beat records as the firm facilitates an increasing number of ILS catastrophe bond placements and ILS trades.
Speaking with Artemis, Sven Althoff, a member of Hannover Re’s executive board since 2014 and focused on property and casualty reinsurance, explained that the company enjoys its role as ILS market facilitator.
Althoff explained, “We see our role as a transformer that helps to facilitate the transfer of insurance and reinsurance risks to capital markets in a catastrophe bond or other suitable form.”
Hannover Re has been playing this facilitation and transformer role for a number of years now, offering its services as ceding reinsurer for fronting catastrophe bond placements for sponsors, as well as offering its paper as a collateralised reinsurance transformer and fronting service to ILS funds or investors.
In addition the reinsurer also helps ceding companies transact with ILS investors using its own segregated accounts company and through the issuance of private catastrophe bonds.
Hannover Re offers these services across a range of risks, Althoff explained, saying it can act as a transformer on a deal, “no matter whether it is from the life and health space or from property and casualty.”
“We collaborate with banks and brokers and strive to come up with the best possible transaction for our clients,” he continued.
Hannover Re has been increasing its activity in these areas steadily.
So far the reinsurance firm has acted as ceding insurer for five full 144A catastrophe bond transactions, which total $1.1 billion of risk capital facilitated in the first-half of 2019 already.
Last year Hannover Re acted on five 144A cat bonds for $1.5 billion of risk capital issued across the full year.
The reinsurer also facilitated a flurry of private catastrophe bond transactions under the Seaside Re name in time for the January 2019 renewal season, as activity here also picked up for the reinsurer.
We understand that Hannover Re has also won some new fronting clients on the collateralised reinsurance side since the exit of Tokio Millennium Re from the market, which is likely to be another area that ILS facilitation and service provision activity is on the rise for the reinsurance firm.
Commenting on Hannover Re’s activity so far this year, Althoff told us, “The variety of cedants and risks as well as the record number of issuances that we are involved in this year underscores our established position as a transformer in the market and our ability to close insurance-linked securities transactions successfully.”