German big four global reinsurance player Hannover Re continues to leverage the insurance-linked securities (ILS) market and appetite of investors for insurance related returns both for its own benefit, in terms of risk transfer, to support its clients needs and to generate fee income.
The reinsurer said in Monte Carlo that its use of ILS expands to feature property catastrophe risks and retrocession, as well as the ceding of other classes of business to investors for its clients.
Hannover Re now cedes business from the life and health reinsurance segment, as well as other property and casualty lines to the ILS market, with collateralised reinsurance the main structure supported, as well as its ongoing business in catastrophe bonds.
Collateralised reinsurance “is still the largest business segment within Hannover Re’s ILS activities” the company explained.
As we detailed last week here, 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 number of ILS catastrophe bond placements and ILS trades it facilitates increases.
The reinsurance firm also invests in the ILS sector, having its Leine Investments vehicle established in Luxembourg.
Hannover Re has one of the longest running sidecar or quota share vehicles that accesses the capital markets in K-Cessions, a structure that continues to find strong support from the ILS investment community.
With its work in ILS still expanding all the time, Hannover Re sees the opportunity as one that will grow further for the firm.
On ILS the reinsurers says, “Over the coming years Hannover Re expects demand to show moderate growth overall.”
Stressing that as it operates across the space, for its own and for clients benefits, as well as investing, it is “maximising all the opportunities offered by the ILS market.”