The use of insurance-linked securities and third-party reinsurance capital is a “strategic component” of the business model for reinsurer PartnerRe, its CEO told us.
In a recent interview in advance of the Monte Carlo Rendez-vous, Emmanuel Clarke, President and CEO of PartnerRe, explained that the reinsurer leverages third-party capital within its reinsurance business to augment its own capacity, while offering ILS investors a way to access the returns of PartnerRe’s underwriting prowess.
Clarke explained, “ILS is a strategic component of our strategy as it enables us to provide more relevant capacity to our clients, while making our experienced and diversified underwriting platform a well sought-after conduit for ILS investors.”
With PartnerRe having an established natural catastrophe and weather risk underwriting operation, within its multi-line business, the opportunities for third-party investors to participate and assist the company are clear.
Clarke explained the need for his underwriters to ensure that when engaging at renewals that, “the terms of long-term partnership are set or reset in a way that is economically attractive for both sides.”
This is what investors will want to hear, under the current market conditions, as PartnerRe is looking to the long-term opportunities for capital deployment, rather than anything shorter-term and more speculative or based on rate alone.
PartnerRe is careful not to grow its third-party capital business too fast though, taking a slow and steady approach to building its activities, such as adding new segregated accounts to its Lorenz Re collateralized reinsurance sidecar vehicle.
Clarke said that the reinsurer still sees the reinsurance market in general as featuring more capital supply than demand for it, meaning rationality is key.
However, the ILS and third-party capital business remains strategically important to PartnerRe and further growth is assured, as conditions allow.
“We have grown our assets under management over the past years, and look to continue to develop long-term aligned partnerships with investors,” Clarke explained.