Swiss Re Insurance-Linked Fund Management

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Hannover Re now fronting for over 1,500 ILS participations

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As of the third-quarter of 2022, global reinsurance giant Hannover Re had expanded its activities in the insurance-linked securities (ILS) and collateralised reinsurance space to include more than 1,500 program participations fronted for.

hannover-re-signHannover Re has been a significant and growing force within the ILS market, putting its significant balance-sheet to use in assisting ILS fund managers and investors to access sources of reinsurance risk more easily and efficiently.

This activity takes place across both the catastrophe bond market, where Hannover Re worked to transfer US $2.7 billion of catastrophe bond issuance to the capital markets in 2021, with 11 cat bond deals facilitated during the year.

As well as in the private ILS and collateralised reinsurance space, where Hannover Re’s fronting activities have been increasing.

In fact, premiums fronted for through the collateralized reinsurance side of its ILS facilitation business have grown at a compound annual rate of 21% over the last five years for Hannover Re.

That’s a significant growth rate and reflects the increasingly important position large fronting carriers play in the ILS market as a whole.

As of the third-quarter of 2022, Hannover Re was fronting for over 1,500 participations for ILS investors and funds.

It shows how Hannover Re has been one of the global reinsurance firms that has embraced the growth of the ILS market and leveraged investor appetite to enable it to support its clients needs for capacity, bringing them a source of diverse and additional capital, while earning fee income for leveraging its balance-sheet to provide fronting to the ILS investor-base.

Investors and ILS fund managers can benefit from both the access to risk, by deploying capital via a rated balance-sheet front.

Hannover Re aims to continue expanding its collateralised reinsurance business, while also seeing the potential for the capital market to assist in financing deals on the life side as well, the company recently said.

As we recently reported, Hannover Re has also continued to benefit from the use of capital markets capacity within its own mortality retrocession arrangements, as its swap instrument continued to pay out for COVID pandemic claims.

Register today for ILS NYC 2023, our next insurance-linked securities (ILS) market conference. Held in New York City, February 10th, 2023.

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