Hannover Re sees ILS capital as sustainable reinsurance addition, source of growth: Horstmann

Speaking earlier today during Hannover Re’s Baden-Baden media briefing, Patrick Horstmann Managing Director, and Head of insurance-linked securities (ILS) at the firm, emphasised that the German reinsurer sees ILS capital as a sustainable addition to the global reinsurance market and a key area of growth for the company.

Hannover Re has been steadily growing in the ILS market in recent years.

In late 2025, the reinsurer launched its Bermuda-based ILS platform, Hannover Re Capital Partners in late 2025, and began writing business at the January 1st 2026 reinsurance renewals to further scale its alternative capital capabilities.

“ILS capital has grown over the last years and has also grown relatively more than traditional reinsurance capital. Meanwhile, it’s roughly 18% of the overall reinsurance capacity, and we see alternative capital as a sustainable addition to the traditional capital in the market,” Horstmann explained during the briefing.

“Especially in the last year we have seen this increase. But we have seen over the long term and over the long horizon the sustainability of ILS capital in the market,” he continued.

Horstmann also outlined that Hannover Re aims to bridge capital markets and cedants, noting that the reinsurer’s ILS activities include five key businesses segments: catastrophe bond transformation, collateralized fronting, life ILS, its cat bond focused manager Leine Investment, and the company’s newest ILS venture the Hannover Re Capital Partners (HCP) unit.

“Since November last year, we have launched an insurance agent in Bermuda called Hannover Re Capital Partners, and that is a platform where we connect third-party capital with the risk, utilising our Hannover Re underwriting, modeling, structuring expertise, and so enabling third-party investors to access traditional reinsurance risk with the help of Hannover Re and the support of Hannover Re,” Horstmann added.

During the Q&A portion, Horstmann provided more detail on HCP.

The executive said the platform is “not a risk-carrying entity” and uses collateralized fronting structures.

He also added that HCP has raised a low triple-digit million amount in assets under management and had fully deployed that capital for the July 1st 2026, renewal.

“At the moment, we are in discussions with further investors to raise additional capital. But I’m always a bit reluctant to give any aims or targets. What I can say is, we are fully aligned with our business plan, which we had initially.

“So we are very satisfied with the development so far and have seen a lot of interest from third-party investors in our activities, appreciating our global market access, our underwriting expertise, and also the ILS knowledge we have gained over the last decades. So we have a lot seen of interest in further discussions,” Horstmann added.

In addition, we also asked Horstmann to outline where Hannover Re sees its biggest opportunities in the capital markets and ILS sector for next year?

“Focusing on the five pillars we have within ILS at Hannover Re, I would say we have a very good market footprint for catastrophe bond transformation and for the collateralized fronting business. So we expect them in the next year, or the next two years, to be stable, potentially slightly growing,” Horstmann said.

Adding: “We have been compared to the market as a bit underrepresented in terms of third-party asset management, so Leine Investment and Hannover Re Capital Partners. So, just because our footprint in the market was not as strong there as for the other areas, I would expect there to be more growth in absolute and on relative terms compared to the other segments.”

We also asked Thorsten Steinmann, CEO, E+S Rück, member of the Executive Board, Hannover Re, whether the reinsurer has any plans in place to look at other opportunities to share risk with investor markets in the near future.

“We’ve always said in the last few weeks because one of those topics which came up is the topic of casualty sidecars, and this is partially done via Lloyd’s partially directly via investors, and this is a space where we are very cautious and we are not playing in this space.

“It’s not part of our product that we are offering to our clients, simply because we believe that the complexity of this long tail business, in combination with the asset management risk that you run, that we are very cautious to play in this field. I’m not saying this is going to be the case forever, but the response today is that we are very cautious and observing,” Steinmann explained.